| [February 14, 2012] |
 |
NeoPhotonics Reports Fourth Quarter and Year End 2011 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 fourth quarter and full year
ended December 31, 2011.
"We are pleased with our results for the fourth quarter of 2011, which
exceeded our projected ranges for revenue, Non-GAAP gross margin and
Non-GAAP earnings per share," said Tim Jenks, Chairman, President and
CEO of NeoPhotonics. "We achieved record quarterly revenue of $57.2
million, and 2011 marks our 9th consecutive year of
year-over-year revenue growth. We experienced strong demand in our
speed, agility and access product categories and avoided adverse impacts
from the floods in Thailand. In addition, we saw an increase in new
customer engagements in the fourth quarter, particularly for our
coherent PIC-based products," continued Mr. Jenks.
"We are also pleased with the performance of Santur Corporation, a
leading designer and manufacturer of indium-phosphide based PIC products
that we acquired in the fourth quarter. Revenue from Santur products was
at the top end of our guidance projections and we have seen an increase
in new customer engagements for Santur products since the acquisition.
We look forward to 2012 and to continuing progress toward our goal of
becoming one of the industry's leading suppliers of optical technology
products for telecom and datacom networks," concluded Mr. Jenks.
Financial results for the fourth quarter of 2011 and full year have been
adjusted to eliminate the financial impact of certain discontinued
operations triggered in the fourth quarter of 2011. Prior periods have
been similarly adjusted to facilitate comparison.
Financial Highlights for the Fourth Quarter of 2011
For the fourth quarter of 2011, NeoPhotonics reported record revenue of
$57.2 million, an increase of $14.3 million, or 33% from the third
quarter of 2011, and an increase of $7.0 million, or 14%, from the
fourth quarter of 2010, inclusive of revenue attributable to Santur
Corporation, which was acquired on October 12, 2011. Gross margin for
the fourth quarter of 2011 was 21.5%, down from 28.1% in the third
quarter of 2011 and 27.9% in the fourth quarter of 2010. Non-GAAP gross
margin for the fourth quarter of 2011 was 23.5%, down from 27.8% for the
third quarter of 2011 and 28.5% for the fourth quarter of 2010.
Loss from continuing operations for the fourth quarter of 2011 was $22.8
million, as compared to loss from continuing operations of $4.2 million
in the third quarter of 2011 and income from continuing operations of
$0.5 million in the fourth quarter of 2010. Non-GAAP loss from
continuing operations for the fourth quarter of 2011 was $6.4 million,
as compared to Non-GAAP loss from continuing operations of $3.2 million
in the third quarter of 2011 and Non-GAAP income from continuing
operations of $1.8 million in the fourth quarter of 2010.
Diluted loss per share from continuing operations for the fourth quarter
of 2011 was $0.92, as compared to diluted loss per share from continuing
operations of $0.17 in the third quarter of 2011 and diluted income per
share from continuing operations of $0.00 in the fourth quarter of 2010.
Non-GAAP diluted loss per share from continuing operations for the
fourth quarter of 2011 was $0.26, as compared to Non-GAAP diluted loss
per share from continuing operations of $0.13 in the third quarter of
2011 and Non-GAAP diluted income per share from continuing operations of
$0.11 in the fourth quarter of 2010. Adjusted EBITDA for the fourth
quarter of 2011 was a loss of $3.0 million, as compared to a loss of
$0.5 million in the third quarter of 2011 and a profit of $4.9 million
in the fourth quarter of 2010.
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.
During the fourth quarter of 2011, a non-cash full impairment charge of
$13.1 million was recorded against goodwill. The company reviews
goodwill for impairment annually or whenever changes in circumstances
indicate that the carrying value of an asset may not be recoverable. Due
to the decrease in the company's market capitalization as of the end of
the fourth quarter of 2011, the company determined that the indicators
of impairment existed and that the carrying value of the company's
goodwill may not be recoverable.
Total cash, cash equivalents and short-term investments at December 31,
2011 was $86.4 million, as compared to $103.0 million at September 30,
2011. The decrease in cash was primarily attributable to paying the
purchase price for Santur Corporation.
Financial Highlights for 2011
NeoPhotonics reported record annual revenue of $201.0 million, an
increase of $23.3 million, or 13%, over $177.7 million in 2010. Gross
margin for 2011 was 24.9%, as compared to 30.6% in 2010. Non-GAAP gross
margin for 2011 was 25.7%, as compared to 31.9% in 2010.
Loss from continuing operations for 2011 was $15.4 million, as compared
to income from continuing operations of $3.7 million in 2010. Non-GAAP
loss from continuing operations for 2011 was $9.6 million, as compared
to Non-GAAP income from continuing operations of $9.0 million in 2010.
Diluted loss per share from continuing operations for 2011 was $1.45, as
compared to diluted income per share from continuing operations of $0.00
for 2010. Non-GAAP diluted loss per share from continuing operations was
$0.40 for 2011, as compared to Non-GAAP diluted income per share from
continuing operations of $0.53 for 2010. Adjusted EBITDA for 2011 was
$2.7 million, as compared to $20.6 million in 2010.
Business Highlights
-
NeoPhotonics closed the acquisition of Santur Corporation. Founded in
2000, Santur is located in Fremont, California, and has focused on
commercializing PIC-based laser array and packaging technologies for
communications. Santur products are designed to provide reduced size,
power consumption and cost for a wide range of DWDM, coherent and
client side networking applications in 10G, 40G and 100G networks. By
combining Santur's indium phosphide PICs with the company's existing
hybrid PICs, NeoPhotonics can provide customers with new products for
100G coherent systems that feature higher levels of integration,
higher performance and greater functionality. Additionally, Santur
brings new growth opportunities to NeoPhotonics with tunable lasers
for reconfigurable networks and 40G and 100G transceiver modules for
client and cloud applications.
-
NeoPhotonics received the prestigious Golden Award as an Excellent
Core Partner from Huawei Technologies, the company's largest customer
and one of the world's leading providers of telecommunications network
solutions. NeoPhotonics was honored for its contributions as a
supplier of innovative technology, plus high-quality and on-time
delivery of its optical products for high-speed, agile and access
communications networks.
-
NeoPhotonics completed the first phase in its plan to increase
production capacity of NLW-TL (narrow linewidth tunable lasers). The
company has doubled NLW-TL output since initiating its expansion plan
in the fourth calendar quarter of 2011, and believes that demand for
these products has outstripped current industry supply capacity due to
the rapid uptake of coherent optical technology coupled with industry
supply constraints attributable to the flooding in Thailand in 2011.
Outlook for the Quarter Ending March 31, 2012
During the first quarter ending March 31, 2012, NeoPhotonics anticipates
results to reflect the typically seasonally lower first quarter against
a more normalized demand pattern versus fourth quarter 2011 revenue that
was atypically strong. Accordingly, NeoPhotonics currently expects
revenue for the first quarter to be in the range of $46 million to $51
million and Non-GAAP gross margin to be in the range of 20% to 22%. The
company currently expects diluted loss per share from continuing
operations to be in the range of $0.40 to $0.50 and Non-GAAP diluted
loss per share from continuing operations to be in the range of $0.25 to
$0.35. The Non-GAAP outlook excludes the expected amortization of
purchased intangibles and other assets relating to the acquisition of
Santur of approximately of $1.6 million, the anticipated impact of stock
based compensation and Santur's pre-acquisition retention expenses of
approximately $2.1 million, and the anticipated impact of restructuring
charges relating to the Santur acquisition of approximately $0.3
million. Of these amounts, approximately $1.4 million is estimated to
relate to cost of goods sold.
Conference Call
The company will discuss these financial results in a conference call at
5:00 p.m. ET (2:00 pm PT) today, February 14, 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 February 17, 2012 at 11:59 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 6941301. 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 March 31, 2012" as well as Mr. Jenks' statements about
the future 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 first 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; 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
Quarterly Report on Form 10-Q filed with the Securities and Exchange
Commission on November 10, 2011. 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
(credit), share of loss of an unconsolidated investee, gain on sale of
shares of an unconsolidated investee, restructuring expenses, business
acquisition-related costs and expenses including the 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 charge 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.
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NeoPhotonics Corporation
|
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Consolidated Statements of Operations (Unaudited)
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(In thousands, except percentages, share and per share data)
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|
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|
|
|
|
|
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Three months ended
|
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Fiscal year ended
|
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|
|
|
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Dec. 31,
2011
|
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Sep. 30,
2011
|
|
Dec. 31,
2010
|
|
Dec. 31,
2011
|
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Dec. 31,
2010
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|
|
|
|
|
|
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|
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Revenue
|
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$
|
57,183
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$
|
42,848
|
|
|
$
|
50,194
|
|
|
$
|
201,029
|
|
|
$
|
177,679
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|
|
Cost of goods sold (1)
|
|
|
|
|
44,909
|
|
|
|
30,827
|
|
|
|
36,197
|
|
|
|
150,944
|
|
|
|
123,373
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
|
|
12,274
|
|
|
|
12,021
|
|
|
|
13,997
|
|
|
|
50,085
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|
|
|
54,306
|
|
|
|
|
|
|
|
21.5
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%
|
|
|
28.1
|
%
|
|
|
27.9
|
%
|
|
|
24.9
|
%
|
|
|
30.6
|
%
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
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|
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Research and development (1)
|
|
|
|
|
11,039
|
|
|
|
7,059
|
|
|
|
5,331
|
|
|
|
30,855
|
|
|
|
20,962
|
|
|
Sales and marketing (1)
|
|
|
|
|
3,368
|
|
|
|
3,103
|
|
|
|
2,598
|
|
|
|
11,686
|
|
|
|
9,078
|
|
|
General and administrative (1)
|
|
|
|
|
7,287
|
|
|
|
5,877
|
|
|
|
4,494
|
|
|
|
21,900
|
|
|
|
16,628
|
|
|
Amortization of purchased intangible
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
assets
|
|
|
|
|
326
|
|
|
|
104
|
|
|
|
289
|
|
|
|
994
|
|
|
|
1,144
|
|
|
Earn out adjustment
|
|
|
|
|
(1,287
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,287
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)
|
|
|
-
|
|
|
Goodwill impairment charges
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|
|
|
|
13,106
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|
|
|
-
|
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|
|
-
|
|
|
|
13,106
|
|
|
|
-
|
|
|
Restructuring charges
|
|
|
|
|
1,297
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|
|
|
-
|
|
|
|
-
|
|
|
|
1,297
|
|
|
|
-
|
|
|
Total operating expenses
|
|
|
|
|
35,136
|
|
|
|
16,143
|
|
|
|
12,712
|
|
|
|
78,551
|
|
|
|
47,812
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations
|
|
|
|
|
(22,862
|
)
|
|
|
(4,122
|
)
|
|
|
1,285
|
|
|
|
(28,466
|
)
|
|
|
6,494
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
|
|
253
|
|
|
|
76
|
|
|
|
37
|
|
|
|
407
|
|
|
|
187
|
|
|
Interest expense
|
|
|
|
|
(192
|
)
|
|
|
(52
|
)
|
|
|
(122
|
)
|
|
|
(422
|
)
|
|
|
(612
|
)
|
|
Other income (expense), net
|
|
|
|
|
(53
|
)
|
|
|
191
|
|
|
|
(166
|
)
|
|
|
14,246
|
|
|
|
(108
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest and other income (expense), net
|
|
|
|
|
8
|
|
|
|
215
|
|
|
|
(251
|
)
|
|
|
14,231
|
|
|
|
(533
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
|
|
(22,854
|
)
|
|
|
(3,907
|
)
|
|
|
1,034
|
|
|
|
(14,235
|
)
|
|
|
5,961
|
|
|
Benefit from (provision for) income taxes
|
|
|
|
|
22
|
|
|
|
(258
|
)
|
|
|
(557
|
)
|
|
|
(1,155
|
)
|
|
|
(2,289
|
)
|
|
Income (loss) from continuing operations
|
|
|
|
|
(22,832
|
)
|
|
|
(4,165
|
)
|
|
|
477
|
|
|
|
(15,390
|
)
|
|
|
3,672
|
|
|
Income (loss) from discontinued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations, net of tax
|
|
|
|
|
523
|
|
|
|
75
|
|
|
|
(127
|
)
|
|
|
636
|
|
|
|
(401
|
)
|
|
Net income (loss)
|
|
|
|
|
(22,309
|
)
|
|
|
(4,090
|
)
|
|
|
350
|
|
|
|
(14,754
|
)
|
|
|
3,271
|
|
|
Net income attributable to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
noncontrolling interests
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(80
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NeoPhotonics Corporation
|
|
|
|
|
(22,309
|
)
|
|
|
(4,090
|
)
|
|
|
350
|
|
|
|
(14,754
|
)
|
|
|
3,191
|
|
|
Deemed dividend on beneficial conversion of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series X redeemable convertible preferred
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
stock and accretion of redeemable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
convertible preferred stock
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(22
|
)
|
|
|
(17,056
|
)
|
|
|
(113
|
)
|
|
Net income (loss) attributable to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NeoPhotonics Corporation common
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
stockholders
|
|
|
|
$
|
(22,309
|
)
|
|
$
|
(4,090
|
)
|
|
$
|
328
|
|
|
$
|
(31,810
|
)
|
|
$
|
3,078
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) per share from continuing operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
$
|
(0.92
|
)
|
|
$
|
(0.17
|
)
|
|
$
|
-
|
|
|
$
|
(1.45
|
)
|
|
$
|
-
|
|
|
Diluted
|
|
|
|
$
|
(0.92
|
)
|
|
$
|
(0.17
|
)
|
|
$
|
-
|
|
|
$
|
(1.45
|
)
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares used to compute income (loss) per share from
continuing operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
24,807,478
|
|
|
|
24,744,417
|
|
|
|
1,950,191
|
|
|
|
22,359,802
|
|
|
|
1,945,111
|
|
|
Diluted
|
|
|
|
|
24,807,478
|
|
|
|
24,744,417
|
|
|
|
2,652,772
|
|
|
|
22,359,802
|
|
|
|
3,123,994
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes stock-based compensation expense (credit) as follows
for the periods presented:
|
|
Cost of goods sold
|
|
|
|
$
|
120
|
|
|
$
|
(133
|
)
|
|
$
|
25
|
|
|
$
|
503
|
|
|
$
|
116
|
|
|
Research and development
|
|
|
|
|
256
|
|
|
|
216
|
|
|
|
89
|
|
|
|
1,033
|
|
|
|
372
|
|
|
Sales and marketing
|
|
|
|
|
145
|
|
|
|
173
|
|
|
|
87
|
|
|
|
647
|
|
|
|
378
|
|
|
General and administrative
|
|
|
|
|
219
|
|
|
|
224
|
|
|
|
157
|
|
|
|
925
|
|
|
|
729
|
|
|
Total stock-based compensation expense
|
|
|
|
$
|
740
|
|
|
$
|
480
|
|
|
$
|
358
|
|
|
$
|
3,108
|
|
|
$
|
1,595
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NeoPhotonics Corporation
|
|
Consolidated Balance Sheets (Unaudited)
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dec. 31,
2011
|
|
Dec. 31,
2010
|
|
ASSETS
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash, cash equivalents and short-term investments
|
|
|
|
$
|
86,384
|
|
|
$
|
24,659
|
|
|
Restricted cash
|
|
|
|
|
3,227
|
|
|
|
2,828
|
|
|
Accounts receivable, net
|
|
|
|
|
68,877
|
|
|
|
52,995
|
|
|
Inventories
|
|
|
|
|
35,341
|
|
|
|
18,532
|
|
|
Prepaid expenses and other current assets
|
|
|
|
|
5,882
|
|
|
|
7,521
|
|
|
Short-term assets held-for-sale
|
|
|
|
|
1,687
|
|
|
|
3,422
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
|
|
201,398
|
|
|
|
109,957
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
|
|
56,344
|
|
|
|
42,887
|
|
|
Goodwill
|
|
|
|
|
-
|
|
|
|
4,323
|
|
|
Other intangible assets, net
|
|
|
|
|
17,999
|
|
|
|
2,146
|
|
|
Other long-term assets
|
|
|
|
|
1,141
|
|
|
|
12,956
|
|
|
Long-term assets held-for-sale
|
|
|
|
|
167
|
|
|
|
226
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
|
$
|
277,049
|
|
|
$
|
172,495
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND
STOCKHOLDERS' EQUITY (DEFICIT)
|
|
Current liabilities:
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
|
$
|
37,599
|
|
|
$
|
28,889
|
|
|
Short-term loans and notes payable
|
|
|
|
|
14,620
|
|
|
|
17,006
|
|
|
Current portion of long-term debt
|
|
|
|
|
5,000
|
|
|
|
5,924
|
|
|
Accrued and other current liabilities
|
|
|
|
|
19,285
|
|
|
|
12,293
|
|
|
Current liabilities held-for-sale
|
|
|
|
|
1,681
|
|
|
|
1,716
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
|
|
78,185
|
|
|
|
65,828
|
|
|
|
|
|
|
|
|
|
|
Long-term debt, net of current portion
|
|
|
|
|
22,166
|
|
|
|
2,912
|
|
|
Deferred income tax liabilities
|
|
|
|
|
927
|
|
|
|
536
|
|
|
Other noncurrent liabilities
|
|
|
|
|
2,117
|
|
|
|
1,316
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
|
|
103,395
|
|
|
|
70,592
|
|
|
|
|
|
|
|
|
|
|
Redeemable convertible preferred stock:
|
|
|
|
|
|
|
|
Series X redeemable convertible
preferred stock
|
|
|
|
|
-
|
|
|
|
46,180
|
|
|
Series 1, 2 and 3 redeemable convertible
preferred stock
|
|
|
|
|
-
|
|
|
|
165,361
|
|
|
|
|
|
|
|
-
|
|
|
|
211,541
|
|
|
Stockholders' equity (deficit):
|
|
|
|
|
|
|
|
Common stock
|
|
|
|
|
62
|
|
|
|
5
|
|
|
Additional paid-in capital
|
|
|
|
|
392,792
|
|
|
|
93,349
|
|
|
Accumulated other comprehensive income
|
|
|
|
|
11,353
|
|
|
|
12,807
|
|
|
Accumulated deficit
|
|
|
|
|
(230,553
|
)
|
|
|
(215,799
|
)
|
|
Total stockholders' equity (deficit)
|
|
|
|
|
173,654
|
|
|
|
(109,638
|
)
|
|
|
|
|
|
|
|
|
|
Total liabilities, redeemable convertible preferred
|
|
|
|
|
|
|
|
|
|
|
|
stock and stockholders' equity (deficit)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
277,049
|
|
|
$
|
172,495
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
Fiscal year ended
|
|
|
|
|
|
December 31,
2011
|
|
September 30,
2011
|
|
December 31,
2010
|
|
December 31,
2011
|
|
December 31,
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-GAAP GROSS PROFIT:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP gross profit
|
|
|
|
$
|
12,274
|
|
|
$
|
12,021
|
|
|
$
|
13,997
|
|
|
$
|
50,085
|
|
|
$
|
54,306
|
|
|
Stock-based compensation expense (credit) (a)
|
|
|
|
|
120
|
|
|
|
(133
|
)
|
|
|
25
|
|
|
|
503
|
|
|
|
116
|
|
|
Amortization of purchased intangible assets (b)
|
|
|
|
|
532
|
|
|
|
7
|
|
|
|
306
|
|
|
|
598
|
|
|
|
2,238
|
|
|
Amortization of acquisition-related fixed asset step-up (c)
|
|
|
|
|
292
|
|
|
|
-
|
|
|
|
-
|
|
|
|
292
|
|
|
|
-
|
|
|
Amortization of acquisition-related inventory step-up (d)
|
|
|
|
|
215
|
|
|
|
-
|
|
|
|
-
|
|
|
|
215
|
|
|
|
-
|
|
|
Acquisition-related costs (e)
|
|
|
|
|
12
|
|
|
|
-
|
|
|
|
-
|
|
|
|
12
|
|
|
|
-
|
|
|
Non-GAAP gross profit
|
|
|
|
$
|
13,445
|
|
|
$
|
11,895
|
|
|
$
|
14,328
|
|
|
$
|
51,705
|
|
|
$
|
56,660
|
|
|
Non-GAAP gross margin (% of revenue)
|
|
|
|
|
23.5
|
%
|
|
|
27.8
|
%
|
|
|
28.5
|
%
|
|
|
25.7
|
%
|
|
|
31.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-GAAP INCOME (LOSS) FROM CONTINUING OPERATIONS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP income (loss) from continuing operations
|
|
|
|
$
|
(22,832
|
)
|
|
$
|
(4,165
|
)
|
|
$
|
477
|
|
|
$
|
(15,390
|
)
|
|
$
|
3,672
|
|
|
Stock-based compensation expense (a)
|
|
|
|
|
740
|
|
|
|
480
|
|
|
|
358
|
|
|
|
3,108
|
|
|
|
1,595
|
|
|
Amortization of purchased intangible assets (b)
|
|
|
|
|
858
|
|
|
|
111
|
|
|
|
595
|
|
|
|
1,592
|
|
|
|
3,382
|
|
|
Amortization of acquisition-related fixed asset step-up (c)
|
|
|
|
|
427
|
|
|
|
-
|
|
|
|
-
|
|
|
|
427
|
|
|
|
-
|
|
|
Amortization of acquisition-related inventory step-up (d)
|
|
|
|
|
215
|
|
|
|
-
|
|
|
|
-
|
|
|
|
215
|
|
|
|
-
|
|
|
Acquisition-related costs (e)
|
|
|
|
|
1,089
|
|
|
|
336
|
|
|
|
-
|
|
|
|
1,426
|
|
|
|
-
|
|
|
Share of loss of an unconsolidated investee (f)
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
444
|
|
|
|
-
|
|
|
|
620
|
|
|
Gain on sale of shares of an unconsolidated investee, net of direct
cost (g)
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(13,829
|
)
|
|
|
-
|
|
|
Restructuring charges (h)
|
|
|
|
|
1,297
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,297
|
|
|
|
-
|
|
|
Fair value adjustment to contingent consideration (i)
|
|
|
|
|
(1,287
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,287
|
)
|
|
|
-
|
|
|
Goodwill impairment charge (j)
|
|
|
|
|
13,106
|
|
|
|
-
|
|
|
|
-
|
|
|
|
13,106
|
|
|
|
-
|
|
|
Income tax effect of Non-GAAP adjustments (k)
|
|
|
|
|
(6
|
)
|
|
|
(6
|
)
|
|
|
(42
|
)
|
|
|
(227
|
)
|
|
|
(239
|
)
|
|
Non-GAAP income (loss) from continuing operations
|
|
|
|
$
|
(6,393
|
)
|
|
$
|
(3,244
|
)
|
|
$
|
1,832
|
|
|
$
|
(9,562
|
)
|
|
$
|
9,030
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP income (loss) from continuing operations
|
|
|
|
$
|
(22,832
|
)
|
|
$
|
(4,165
|
)
|
|
$
|
477
|
|
|
$
|
(15,390
|
)
|
|
$
|
3,672
|
|
|
Stock-based compensation expense (a)
|
|
|
|
|
740
|
|
|
|
480
|
|
|
|
358
|
|
|
|
3,108
|
|
|
|
1,595
|
|
|
Amortization of purchased intangible assets (b)
|
|
|
|
|
858
|
|
|
|
111
|
|
|
|
595
|
|
|
|
1,592
|
|
|
|
3,382
|
|
|
Amortization of acquisition-related fixed asset step-up (c)
|
|
|
|
|
427
|
|
|
|
-
|
|
|
|
-
|
|
|
|
427
|
|
|
|
-
|
|
|
Amortization of acquisition-related inventory step-up (d)
|
|
|
|
|
215
|
|
|
|
-
|
|
|
|
-
|
|
|
|
215
|
|
|
|
-
|
|
|
Acquisition-related costs (e)
|
|
|
|
|
1,089
|
|
|
|
336
|
|
|
|
-
|
|
|
|
1,426
|
|
|
|
-
|
|
|
Share of loss of an unconsolidated investee (f)
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
444
|
|
|
|
-
|
|
|
|
620
|
|
|
Gain on sale of shares of an unconsolidated investee, net of direct
cost (g)
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(13,829
|
)
|
|
|
-
|
|
|
Restructuring charges (h)
|
|
|
|
|
1,297
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,297
|
|
|
|
-
|
|
|
Fair value adjustment to contingent consideration (i)
|
|
|
|
|
(1,287
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,287
|
)
|
|
|
-
|
|
|
Goodwill impairment charge (j)
|
|
|
|
|
13,106
|
|
|
|
-
|
|
|
|
-
|
|
|
|
13,106
|
|
|
|
-
|
|
|
Interest (income) expense, net (l)
|
|
|
|
|
(61
|
)
|
|
|
(24
|
)
|
|
|
85
|
|
|
|
15
|
|
|
|
425
|
|
|
Provision for (benefit from) income taxes (m)
|
|
|
|
|
(22
|
)
|
|
|
258
|
|
|
|
557
|
|
|
|
1,155
|
|
|
|
2,289
|
|
|
Depreciation expense (n)
|
|
|
|
|
3,470
|
|
|
|
2,514
|
|
|
|
2,413
|
|
|
|
10,844
|
|
|
|
8,635
|
|
|
Adjusted EBITDA
|
|
|
|
$
|
(3,000
|
)
|
|
$
|
(490
|
)
|
|
$
|
4,929
|
|
|
$
|
2,679
|
|
|
$
|
20,618
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-GAAP DILUTED INCOME (LOSS) PER SHARE FROM CONTINUING
OPERATIONS:
|
|
GAAP diluted income (loss) per share from continuing operations
|
|
|
|
$
|
(0.92
|
)
|
|
$
|
(0.17
|
)
|
|
$
|
-
|
|
|
$
|
(1.45
|
)
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP diluted income (loss) per share from continuing operations
|
|
|
|
$
|
(0.26
|
)
|
|
$
|
(0.13
|
)
|
|
$
|
0.11
|
|
|
$
|
(0.40
|
)
|
|
$
|
0.53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SHARES USED TO COMPUTE NON-GAAP DILUTED INCOME (LOSS) PER SHARE
FROM CONTINUING OPERATIONS:
|
|
Shares used to compute GAAP diluted income (loss) per share from
continuing operations
|
|
|
|
|
24,807,478
|
|
|
|
24,744,417
|
|
|
|
2,652,772
|
|
|
|
22,359,802
|
|
|
|
3,123,994
|
|
|
Weighted average effect of the assumed
conversion of convertible preferred stock from
the date of issuance and dilutive securities under the treasury
method (o)
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
14,038,489
|
|
|
|
1,667,856
|
|
|
|
13,972,706
|
|
|
Shares used to compute Non-GAAP diluted income (loss) per share from
continuing operations
|
|
|
|
|
24,807,478
|
|
|
|
24,744,417
|
|
|
|
16,691,261
|
|
|
|
24,027,658
|
|
|
|
17,096,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Non-GAAP financial measures included in the table above adjust for
the following items:
|
a)
|
|
Stock-based compensation expense (credit). Included in the
GAAP financial results are charges (credits) 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 (credit).
|
|
|
|
|
|
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 depreciation 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 depreciation 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)
|
|
Share of loss of an unconsolidated investee. Included in
the GAAP financial results is the company's share of loss of an
unconsolidated investee related to an investment. Management
excludes its share of loss of an unconsolidated investee from its
Non-GAAP financial measures because management believes it is not
indicative of the company's core operating performance.
|
|
|
|
|
|
g)
|
|
Gain on sale of shares of an unconsolidated investee, net of
direct cost. Included in the GAAP financial results is the
company's gain on the sale of shares of an unconsolidated investee
related to an investment. Management excludes this gain from its
Non-GAAP financial measures because management believes it is not
reflective of the company's core operating performance.
|
|
|
|
|
|
h)
|
|
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.
|
|
|
|
|
|
i)
|
|
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.
|
|
|
|
|
|
j)
|
|
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.
|
|
|
|
|
|
k)
|
|
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.
|
|
|
|
|
|
l)
|
|
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.
|
|
|
|
|
|
m)
|
|
Provision for 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.
|
|
|
|
|
|
n)
|
|
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.
|
|
|
|
|
|
o)
|
|
Diluted shares. The shares used to compute diluted income
(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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