TMCnet News
Ixia Announces 2009 Third Quarter ResultsCALABASAS, Calif. --(Business Wire)-- Ixia (Nasdaq: XXIA) today reported its financial results for the third quarter ended September 30, 2009. Total revenues for the 2009 third quarter were $46.4 million compared to $47.3 million in the 2008 third quarter. Revenues for the 2009 third quarter include $7.5 million attributable to Catapult Communications (News - Alert) Corporation ("Catapult"). On a GAAP basis, the Company recorded a net loss for the 2009 third quarter of $6.2 million, or $0.10 per share, compared to net income of $483,000, or $0.01 per diluted share, for the 2008 third quarter. Non-GAAP net income for the 2009 third quarter was $1.5 million, or $0.02 per diluted share, compared to non-GAAP net income of $6.3 million, or $0.10 per diluted share, for the 2008 third quarter. Ixia's non-GAAP 2009 third quarter results exclude charges of $1.6 million related to stock-based compensation, $880,000 for acquisition-related costs, $3.8 million for the amortization of acquired intangible assets, $2.5 million related to restructuring expenses, $1.0 million for certain inventory write-downs and $1.4 million related to the impairment of certain investments, and a net tax benefit of $3.4 million related to these items. Non-GAAP results for the 2008 third quarter exclude charges of $2.4 million related to stock-based compensation, $1.4 million for the amortization of acquired intangible assets and $4.3 million related to the impairment of certain investments, and a net tax benefit of $2.2 million related to these items. "Ixia delivered solid revenues and executed on multiple fronts during the quarter, including the Catapult integration and the release of our next generation IxNetwork Layer 2-3 test solution," commented Atul Bhatnagar (News - Alert), Ixia's president and chief executive officer. "The integration of Catapult is nearly complete with unified sales and engineering teams operating effectively around the globe. In our first full quarter of operating Ixia and Catapult as one business, we experienced meaningful sequential growth in orders, both for our core wired products as well as for our wireless offerings. In addition, sales of our 10 Gigabit Ethernet products hit a new high and our Asia Pacific business rebounded nicely. On the cost side, we are starting to see some benefits from the restructuring plan announced in the second quarter and have moved quickly to realize cost synergies related to the Catapult business. Going forward, we will continue to focus on improving our operating results while also executing on critical initiatives to strengthen our position in the market, such as our recently announced acquisition of Agilent Technologies' N2X Data Network Testing Product line. This acquisition, when completed on or about October 30, 2009, will further fortify Ixia as a global leader in Converged Ethernet IP and LTE testing." As of September 30, 2009, Ixia had cash, cash equivalents and investments of $129 million and no debt. Ixia will host a conference call today, at 5:00 p.m., Eastern Time, for analysts and investors to discuss its 2009 third quarter results and its business outlook for the 2009 fourth quarter. Open to the public, a live Web cast of the conference call, along with supplemental financial information, will be accessible from the "Investors" section of Ixia's Web Site (www.ixiacom.com). Following the live Web cast, an archived version will be available in the "Investors" section on the Ixia Web Site for 90 days. Non-GAAP Information To supplement our consolidated financial results prepared in accordance with Generally Accepted Accounting Principles ("GAAP"), we have included certain non-GAAP financial measures in this press release and in the attachments hereto. Specifically, we have provided non-GAAP financial measures (e.g., non-GAAP cost of revenues, non-GAAP operating expenses, non-GAAP operating income, non-GAAP income tax expense, non-GAAP net income, and non-GAAP diluted earnings per share) that exclude certain charges such as stock-based compensation expenses, acquisition related costs incurred in 2009, the amortization of acquisition-related intangible assets, restructuring expenses, certain inventory write-downs and the impairment charges related to certain investments, as well as the related income tax effects of such items. The aforementioned charges represent charges that may be difficult to estimate from period to period and that are not directly attributable to the underlying performance of our business operations. These non-GAAP financial measures are provided to enhance the user's overall understanding of our financial performance. We believe that by excluding certain charges, as well as the related income tax effects, our non-GAAP measures provide supplemental information to both management and investors that is useful in assessing our core operating performance, in evaluating our ongoing business operations and in comparing our results of operations on a consistent basis from period to period. These non-GAAP financial measures are also used by management to plan and forecast future periods and to assist in making operating and strategic decisions. The presentation of this additional information is not prepared in accordance with GAAP. The information therefore may not necessarily be comparable to that of other companies and should be considered as a supplement to, not a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP. Investors are encouraged to review the reconciliations of GAAP to non-GAAP financial measures which are included below in this press release. About Ixia Ixia is a leading provider of converged IP performance test systems and service verification platforms for wireless and wired infrastructures and services. Ixia's test systems are used by network and telephony equipment manufacturers, semiconductor manufacturers, service providers, governments and enterprises to validate the performance and reliability of complex networks, devices, and applications. Ixia's multiplay test systems address the growing need to test voice, video, and data services and network capability under real-world conditions. For more information, contact Ixia at 26601 W. Agoura Road, Calabasas, CA 91302; (818) 871-1800, Fax: (818) 871-1805; Email: [email protected] or visit our Web Site at http://www.ixiacom.com. Ixia, IxNetwork and the Ixia four petal logo are trademarks and/or registered trademarks of Ixia. Other trademarks are the property of their respective owners. Safe Harbor Under the Private Securities Litigation Reform Act of 1995: Certain statements made in this press release are forward-looking statements, including, without limitation, statements regarding possible future revenues, cost savings, growth and profitability and future business and market share. In some cases, such forward-looking statements can be identified by terms such as "may," "will," "should," "could," "would," "expect," "plan," "anticipate," "believe," "estimate," "project," "predict," "potential," and variations of these words and similar expressions are intended to identify forward-looking statements. These statements reflect our current views with respect to future events and are based on assumptions and are subject to risks and uncertainties. These risks, uncertainties and other factors may cause our future results, performances or achievements to be materially different from those expressed or implied by our forward-looking statements and include, among other things: the current global economy, our success with the integration of our recently completed acquisition of Catapult and pending acquisition of Agilent Technologies' N2X Data Network Testing Product line, competition, our ability to successfully defend any claims from taxing authorities in the various countries where we conduct business, consistency of orders from significant customers, our success in developing and producing new products, market acceptance of our products and our ability to realize all of the expected benefits of our restructuring plan. The factors that may cause future results to differ materially from our current expectations also include, without limitation, the risks identified in our Annual Report on Form 10-K for the year ended December 31, 2008, and in our other filings with the Securities and Exchange Commission. Many of these risks and uncertainties are outside of our control and are difficult for us to forecast or mitigate. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. IXIA Condensed Consolidated Balance Sheets (in thousands) (unaudited) September 30, December 31, 2009 2008 Assets Current assets: Cash and cash equivalents $ 15,322 $ 192,791 Short-term investments in marketable securities 58,565 9,850 Accounts receivable, net 37,219 34,001 Inventories 16,182 14,966 Deferred income taxes 6,313 4,855 Prepaid expenses and other current assets 4,140 4,981 Total current assets 137,741 261,444 Investments in marketable securities 54,813 3,657 Property and equipment, net 18,056 18,506 Deferred income taxes 26,835 14,945 Intangible assets, net 52,032 10,592 Goodwill 39,194 16,728 Other assets 2,290 2,554 Total assets $ 330,961 $ 328,426 Liabilities and Shareholders' Equity Current liabilities: Accounts payable $ 4,228 $ 4,729 Accrued expenses 20,612 18,823 Deferred revenues 24,481 19,558 Income taxes payable 673 452 Total current liabilities 49,994 43,562 Deferred revenues 4,681 6,109 Other liabilities 12,321 5,559 Total liabilities 66,996 55,230 Shareholders' equity: Common stock, without par value; 200,000 shares authorized at September 30, 2009 and December 31, 2008; 62,635 and 63,391 shares issued and outstanding as of September 30, 2009 and December 31, 2008, respectively 85,717 92,386 Additional paid-in capital 116,155 107,882 Retained earnings 60,314 73,182 Accumulated other comprehensive income (loss) 1,779 (254 ) Total shareholders' equity 263,965 273,196 Total liabilities and shareholders' equity $ 330,961 $ 328,426 IXIA Condensed Consolidated Statements of Income (in thousands, except per share data) (unaudited) Three months ended Nine months ended September 30, September 30, 2009 2008 2009 2008 Revenues: Products $ 37,076 $ 39,888 $ 97,598 $ 113,605 Services 9,298 7,436 24,305 21,290 Total revenues 46,374 47,324 121,903 134,895 Costs and operating expenses:(1) Cost of revenues - products 10,461 8,100 25,971 24,940 Cost of revenues - services 823 965 2,567 3,153 Research and development 13,692 12,483 37,001 36,991 Sales and marketing 15,233 14,474 42,990 44,197 General and administrative 7,359 6,526 20,097 18,944 Amortization of intangible assets 3,774 1,374 6,485 4,282 Acquisition related 880 3,402 738 Restructuring 2,527 3,538 Total costs and operating expenses 54,749 43,922 142,051 133,245 (Loss) income from operations (8,375 ) 3,402 (20,148 ) 1,650 Interest and other income, net 343 1,405 1,572 5,938 Other-than-temporary impairment on investments (1,356 ) (4,298 ) (2,761 ) (4,298 ) (Loss) income before income taxes (9,388 ) 509 (21,337 ) 3,290 Income tax (benefit) expense (3,165 ) 26 (8,469 ) 920 Net (loss) income $ (6,223 ) $ 483 $ (12,868 ) $ 2,370 (Loss) earnings per share: Basic $ (0.10 ) $ 0.01 $ (0.21 ) $ 0.04 Diluted $ (0.10 ) $ 0.01 $ (0.21 ) $ 0.04 Weighted average number of common and common equivalent shares outstanding: Basic 62,551 63,473 62,649 65,580 Diluted 62,551 64,416 62,649 66,539 (1) Stock-based compensation included in: Cost of revenues - products $ 76 $ 120 $ 339 $ 368 Cost of revenues - services 29 45 129 140 Research and development 596 866 3,259 2,749 Sales and marketing 271 781 2,332 2,555 General and administrative 626 552 1,986 1,920 IXIA Non-GAAP Information and Reconciliation to Comparable GAAP Financial Measures (in thousands, except percentages and per share data) (unaudited) Three months ended September 30, 2009 2008 Amount ($) % Total Revenues Amount ($) % Total Revenues Total cost of revenues - GAAP $ 11,284 24.3 % $ 9,065 19.2 % Inventory charges(a) (1,012 ) -2.2 % % Stock-based compensation(b) (105 ) -0.2 % (165 ) -0.4 % Total cost of revenues - Non-GAAP $ 10,167 21.9 % $ 8,900 18.8 % Operating expenses - GAAP $ 43,465 93.7 % $ 34,857 73.7 % Amortization of intangible assets(c) (3,774 ) -8.1 % (1,374 ) -2.9 % Acquisition related(d) (880 ) -1.9 % % Restructuring(e) (2,527 ) -5.4 % % Stock-based compensation(b) (1,493 ) -3.3 % (2,199 ) -4.7 % Operating expenses - Non-GAAP $ 34,791 75.0 % $ 31,284 66.1 % (Loss) income from operations - GAAP $ (8,375 ) -18.1 % $ 3,402 7.2 % Effect of reconciling items(f) 9,791 21.2 % 3,738 7.9 % Income from operations - Non-GAAP $ 1,416 3.1 % $ 7,140 15.1 % Other-than-temporary impairment on investments - GAAP $ (1,356 ) -2.9 % $ (4,298 ) -9.1 % Effect of reconciling items(g) 1,356 2.9 % 4,298 9.1 % Other-than-temporary impairment on investments - Non-GAAP $ % $ % Income tax (benefit) expense - GAAP $ (3,165 ) -6.8 % $ 26 0.1 % Effect of reconciling items(h) 3,379 7.3 % 2,188 4.6 % Income tax expense - Non-GAAP $ 214 0.5 % $ 2,214 4.7 % Net (loss) income - GAAP $ (6,223 ) -13.4 % $ 483 1.0 % Effect of reconciling items(i) 7,768 16.7 % 5,848 12.4 % Net income - Non-GAAP $ 1,545 3.3 % $ 6,331 13.4 % Diluted (loss) earnings per share - GAAP $ (0.10 ) $ 0.01 Effect of reconciling items(j) 0.12 0.09 Diluted earnings per share - Non-GAAP $ 0.02 $ 0.10 (a) This reconciling item consists of approximately $850,000 for the write-down of certain inventory items and approximately $162,000 for the recognition of purchase price accounting related to the fair value of sold inventory attributable to the acquisition of Catapult Communications Corporation (News - Alert). While we may have additional inventory write-downs in the future as well as amortization of purchase price accounting adjustments, management excludes these expenses when evaluating current performance, forecasting future results, measuring core operating results, and making operating and strategic decisions. We believe that by excluding these charges, we provide investors with supplemental information that is useful in comparing our operating results from period to period and in evaluating our core operations and performance. (b) This reconciling item represents stock-based compensation expenses. As stock-based compensation represents a non-cash charge that is not directly attributable to the underlying performance of our business operations, we believe that by excluding stock-based compensation, investors are provided with supplemental information that is useful in comparing our operating results from period to period and in evaluating our core operations and performance. While we expect to continue to recognize stock-based compensation expense in the future, management also excludes this expense when evaluating current performance, forecasting future results, measuring core operating results, and making operating and strategic decisions. (c) This reconciling item represents the amortization of intangible assets related to the acquisitions of various businesses and technologies such as the acquisition of Catapult Communications Corporation and the acquisition of certain rights associated with the Chariot® product line from NetIQ (News - Alert) Corporation. As the amortization expense represents a non-cash charge that is not directly attributable to the underlying performance of our business operations, we believe that by excluding the amortization of acquisition-related intangible assets, investors are provided with supplemental information that is useful in evaluating our ongoing operations and performance. While the amortization of intangible assets is expected to continue in the future, management also excludes this expense when evaluating current performance, forecasting future results, measuring core operating results, and making operating and strategic decisions. (d) This reconciling item represents costs associated with our acquisition of Catapult Communications Corporation in June 2009 and our recently announced definitive agreement to buy Agilent Technologies' N2X Data Network Testing Product line. Acquisition related costs consist primarily of transaction and integration related costs such as success-based banking fees, professional fees for legal, accounting, tax, valuation and other related services, integration related consulting fees, required regulatory costs and other related expenses. We believe that by excluding acquisition related costs, we provide investors with supplemental information that is useful in comparing our ongoing operating results from period to period and in evaluating our core operations and performance. (e) This reconciling item represents costs associated with our restructuring plan announced during the second quarter of 2009 as well as the restructuring costs related to our acquisition of Catapult Communications Corporation. These costs primarily relate to one-time employee termination benefits consisting of severance and other related costs. We believe that by excluding restructuring costs, we provide investors with supplemental information that is useful in comparing our operating results from period to period and in evaluating our core operations and performance. (f) This adjustment represents the effects of the reconciling items noted in footnotes (a), (b), (c), (d) and (e). (g) This reconciling item represents other-than-temporary impairments on our previous investments in auction rate securities and long term bonds issued by Lehman Brothers (News - Alert) Holdings, Inc. As these other-than-temporary impairments represent non-cash charges that are not directly attributable to the underlying performance of our business operations, we believe that by excluding these other-than-temporary impairments, we provide investors with supplemental information that is useful in comparing our operating results from period to period and in evaluating our core operations and performance. (h) This adjustment represents the income tax effects of the reconciling items noted in footnotes (a), (b), (c), (d), (e) and (g). (i) This adjustment represents the effects of the reconciling items noted in footnotes (a), (b), (c), (d), (e) and (g), net of tax. (j) This adjustment represents the effects of the reconciling items noted in footnotes (a), (b), (c), (d), (e) and (g), net of tax, on a diluted per share basis. IXIA Non-GAAP Information and Reconciliation to Comparable GAAP Financial Measures (in thousands, except percentages and per share data) (unaudited) Nine months ended September 30, 2009 2008 Amount ($) % Total Revenues Amount ($) % Total Revenues Total cost of revenues - GAAP $ 28,538 23.4 % $ 28,093 20.8 % Inventory charges(a) (1,785 ) -1.5 % % Stock-based compensation(b) (468 ) -0.3 % (508 ) -0.4 % Total cost of revenues - Non-GAAP $ 26,285 21.6 % $ 27,585 20.4 % Operating expenses - GAAP $ 113,513 93.1 % $ 105,152 78.0 % Amortization of intangible assets(c) (6,485 ) -5.3 % (4,282 ) -3.2 % Acquisition related(d) (3,402 ) -2.8 % % Restructuring(e) (3,538 ) -2.9 % % Stock-based compensation(b) (7,577 ) -6.2 % (7,224 ) -5.4 % Operating expenses - Non-GAAP $ 92,511 75.9 % $ 93,646 69.4 % (Loss) income from operations - GAAP $ (20,148 ) -16.5 % $ 1,650 1.2 % Effect of reconciling items(f) 23,255 19.0 % 12,014 9.0 % Income from operations - Non-GAAP $ 3,107 2.5 % $ 13,664 10.2 % Other-than-temporary impairment on investments - GAAP $ (2,761 ) -2.3 % $ (4,298 ) -3.2 % Effect of reconciling items(g) 2,761 2.3 % 4,298 3.2 % Other-than-temporary impairment on investments - Non-GAAP $ % $ % Income tax (benefit) expense - GAAP $ (8,469 ) -6.9 % $ 920 0.7 % Effect of reconciling items(h) 9,211 7.5 % 5,175 3.8 % Income tax expense - Non-GAAP $ 742 0.6 % $ 6,095 4.5 % Net (loss) income - GAAP $ (12,868 ) -10.6 % $ 2,370 1.8 % Effect of reconciling items(i) 16,805 13.8 % 11,137 8.2 % Net income - Non-GAAP $ 3,937 3.2 % $ 13,507 10.0 % Diluted (loss) earnings per share - GAAP $ (0.21 ) $ 0.04 Effect of reconciling items(j) 0.27 0.16 Diluted earnings per share - Non-GAAP $ 0.06 $ 0.20 (a) This reconciling item consists of approximately $850,000 for the write-down of certain inventory items and approximately $162,000 for the recognition of purchase price accounting related to the fair value of sold inventory attributable to the acquisition of Catapult Communications Corporation. While we may have additional inventory write-downs in the future as well as amortization of purchase price accounting adjustments, management excludes these expenses when evaluating current performance, forecasting future results, measuring core operating results, and making operating and strategic decisions. We believe that by excluding these charges, we provide investors with supplemental information that is useful in comparing our operating results from period to period and in evaluating our core operations and performance. (b) This reconciling item represents stock-based compensation expenses. As stock-based compensation represents a non-cash charge that is not directly attributable to the underlying performance of our business operations, we believe that by excluding stock-based compensation, investors are provided with supplemental information that is useful in comparing our operating results from period to period and in evaluating our core operations and performance. While we expect to continue to recognize stock-based compensation expense in the future, management also excludes this expense when evaluating current performance, forecasting future results, measuring core operating results, and making operating and strategic decisions. (c) This reconciling item represents the amortization of intangible assets related to the acquisitions of various businesses and technologies such as the acquisition of Catapult Communications Corporation and the acquisition of certain rights associated with the Chariot® product line from NetIQ Corporation. As the amortization expense represents a non-cash charge that is not directly attributable to the underlying performance of our business operations, we believe that by excluding the amortization of acquisition-related intangible assets, investors are provided with supplemental information that is useful in evaluating our ongoing operations and performance. While the amortization of intangible assets is expected to continue in the future, management also excludes this expense when evaluating current performance, forecasting future results, measuring core operating results, and making operating and strategic decisions. (d) This reconciling item represents costs associated with our acquisition of Catapult Communications Corporation in June 2009 and our recently announced definitive agreement to buy Agilent Technologies' N2X Data Network Testing Product line. Acquisition related costs consist primarily of transaction and integration related costs such as success-based banking fees, professional fees for legal, accounting, tax, valuation and other related services, integration related consulting fees, required regulatory costs and other related expenses. We believe that by excluding acquisition related costs, we provide investors with supplemental information that is useful in comparing our ongoing operating results from period to period and in evaluating our core operations and performance. (e) This reconciling item represents costs associated with our restructuring plan announced during the second quarter of 2009 as well as the restructuring costs related to our acquisition of Catapult Communications Corporation. These costs primarily relate to one-time employee termination benefits consisting of severance and other related costs. We believe that by excluding restructuring costs, we provide investors with supplemental information that is useful in comparing our operating results from period to period and in evaluating our core operations and performance. (f) This adjustment represents the effects of the reconciling items noted in footnotes (a), (b), (c), (d) and (e). (g) This reconciling item represents other-than-temporary impairments on our previous investments in auction rate securities and long term bonds issued by Lehman Brothers Holdings, Inc. As these other-than-temporary impairments represent non-cash charges that are not directly attributable to the underlying performance of our business operations, we believe that by excluding these other-than-temporary impairments, we provide investors with supplemental information that is useful in comparing our operating results from period to period and in evaluating our core operations and performance. (h) This adjustment represents the income tax effects of the reconciling items noted in footnotes (a), (b), (c), (d), (e) and (g). (i) This adjustment represents the effects of the reconciling items noted in footnotes (a), (b), (c), (d), (e) and (g), net of tax. (j) This adjustment represents the effects of the reconciling items noted in footnotes (a), (b), (c), (d), (e) and (g), net of tax, on a diluted per share basis. |
