[June 23, 2014] |
|
Ixia Files Fiscal Year 2013 Annual Report and Announces Fourth Quarter 2013 Financial Results
CALABASAS, Calif. --(Business Wire)--
Ixia (Nasdaq: XXIA) today reported its financial results for the
fourth quarter and fiscal year ended December 31, 2013. Ixia has
also made substantial progress toward becoming current with its
Securities and Exchange Commission (the "SEC") reports by filing today
reports that include its Annual Report on Form 10-K for the year ended
December 31, 2013, its Quarterly Report on Form 10-Q for the quarter
ended September 30, 2013, and the amendments to its quarterly reports
necessary to complete the company's previously announced restatement of
its financial statements for the first and second quarters of 2013.
Management Commentary by Errol Ginsberg,
Chairman and Acting CEO
"We are pleased to bring our 2013 audit to a close and file our 2013
financial statements with the SEC. While the past eight months have been
challenging on several fronts, we have continued to focus on innovation
and on executing and moving the business forward. Our total fourth
quarter bookings were within our expectations and we exited the quarter
with a book-to-bill greater than one. Revenue came in at $120.6 million
(includes $4.8 million of post-acquisition Net Optics sales). Revenue
was slightly below the low-end of guidance principally due to a mix of
orders that included a larger proportion of orders for our warranty and
Application Threat Intelligence (ATI) subscription offerings for which
revenue is recognized ratably over the related service periods. Notably,
deferred revenue grew by $15 million sequentially in the fourth quarter.
In early December 2013, we completed the acquisition of Net Optics and
quickly began integrating the teams, systems and product families. I am
pleased to report that this integration is now substantially complete. A
significant part of the integration included a major collaborative
restructuring of the sales team, coupled with many new hires in key
roles. We now have one unified Network Visibility Solutions (NVS) team
with senior leaders across sales, marketing, operations and product
development. Although the integration of the sales teams was completed
in less than two months, this negatively impacted our first quarter NVS
bookings as our leaders and field resources settled into their new
territories. Today, our integrated sales force is set and cross-trained
on the combined NVS portfolio with an enhanced level of support and
responsiveness on a global level. From a product perspective, we are
already seeing the benefits of our combined product portfolio in the
competitive landscape.
Overall, the market trends in the test market have remained essentially
unchanged. In switching and routing, demand for high-speed Ethernet
solutions is increasing on a port count basis, while the demand for 1G
and 10G Ethernet solutions continues to gradually decline. We were first
to market with 40G and 100G Ethernet test platforms, and with our recent
introduction of the industry's first 400G Ethernet test platform, we
continue to lead the industry in creating cutting edge solutions that
enable our customers to develop, test and validate the networking
technologies of the future. The applications and security test market
continues to show solid growth, and we are pleased with our recent
performance and momentum in this market. In the fourth quarter, we
launched our PerfectStorm solution that integrates our IxLoad and
BreakingPoint software on one platform. PerfectStorm is one of the most
successful new product launches in our history.
While we are still in the early stages of closing our first quarter
financials, we currently expect first quarter revenue to be in the range
of $109 million to $113 million. While we exited the first quarter with
a book-to-bill greater than one, first quarter revenue was negatively
impacted by lighter NVS bookings due to the impact of the sales
integration activities discussed above, a larger than expected mix of
warranty and ATI subscription bookings as part of our total bookings,
continued market trends in the test market, as well as normal seasonal
patterns. We expect non-GAAP gross margin to increase sequentially and
non-GAAP operating margin to be in the mid to high single digits due to
the lower topline, higher seasonal expense levels and litigation costs,
and the Net Optics acquisition. We expect our effective tax rate for the
2014 first quarter to increase on a sequential basis as a result of the
expiration of the federal R&D tax credit.
We are focused on completing our 10-Q for 2014 first quarter, which we
expect to file in July. Lastly, on the leadership front, our goal is to
name a permanent CEO and CFO by the end of the third quarter."
Fourth Quarter Financial Summary
-
Total revenue was $120.6 million, compared with $113.2 million
reported in the 2013 third quarter and $125.5 million reported for the
2012 fourth quarter. The 2013 fourth quarter includes $4.8 million in
revenue attributable to Net Optics, which was acquired on December 5,
2013. Total 2013 fourth quarter revenue was below guidance previously
announced for the fourth quarter primarily due to a higher than
expected mix of warranty and ATI subscription bookings for which
revenue is recognized ratably over the service periods.
-
Deferred revenue grew to $104 million, compared with $89 million in
the 2013 third quarter and $75 million in the 2012 fourth quarter.
-
GAAP gross margin was 75.4%, compared with 78.3% in the 2013 third
quarter. Non-GAAP gross margin was 76.0%, compared with 78.4% in the
2013 third quarter. Gross margin was impacted by $2.5 million of
inventory-related charges associated with end-of-life and older
network test products. Gross margin in the 2013 fourth quarter was
also negatively affected, to a lesser extent, by the addition of lower
margin Net Optics sales.
-
Total operating expense was $94.5 million, compared with $84.4 million
in the 2013 third quarter. Non-GAAP operating expenses were in line
with expectations at $73.2 million, compared with $68.3 million in the
2013 third quarter. The increase in non-GAAP operating expenses was
primarily related to the addition of Net Optics and higher year-end
commission expenses.
-
Operating loss was $3.5 million or (2.9%) of revenue, compared with
operating income of $4.2 million or 3.7% of revenue in the 2013 third
quarter. Non-GAAP operating income was $18.5 million or 15.4% of
revenue, compared with $20.5 million or 18.1% of revenue in the 2013
third quarter.
-
Net loss was $3.1 million, or ($0.04) per share, compared with net
income of $4.1 million, or $0.05 per diluted share, for the 2013 third
quarter and $3.7 million, or $0.05 per diluted share, for the 2012
fourth quarter.
-
Non-GAAP net income was $11.9 million, or $0.15 per diluted share,
compared with non-GAAP net income of $13.0 million, or $0.16 per
diluted share, for the 2013 third quarter and $20.1 million, or $0.25
per diluted share, for the 2012 fourth quarter.
Fiscal Year 2013 Summary
-
Total revenue was a record $467.3 million, an increase of 13% compared
with $413.4 million reported for fiscal year 2012. Fiscal year 2013
revenue includes $4.8 million attributable to the acquisition of Net
Optics completed on December 5, 2013. Total revenue for fiscal years
2013 and 2012 included $138.2 million and $54.9 million, respectively,
related to our 2012 acquisitions of Anue and BreakingPoint.
-
Gross margin was 78.0%, compared with 80.1% in 2012. Non-GAAP gross
margin was 78.2%, compared with 80.5% in 2012.
-
Operating income was $12.3 million or 2.6% of revenue, compared with
$24.3 million or 5.9% of revenue in 2012. Non-GAAP operating income
was $84.6 million or 18.1% of revenue, compared with $92.9 million or
22.5% of revenue in 2012.
-
Net income was $11.9 million, or $0.15 per diluted share, compared
with $45.5 million, or $0.59 per diluted share, in 2012. Non-GAAP net
income was $56.5 million, or $0.69 per diluted share, compared with
$61.7 million, or $0.78 per diluted share, in 2012.
-
Ixia ended 2013 with $85.7 million in cash, cash equivalents and
investments, compared with $177.5 million at December 31, 2012. The
decrease was primarily attributable to the payment of approximately
$192 million in net cash consideration for Net Optics. This decrease
was partially offset by cash flow from operations of $87 million for
the year ended 2013.
A reconciliation of Ixia's non-GAAP measures used herein to the most
directly comparable GAAP measures for the 2013 and 2012 fourth quarters
and for the fiscal years ended December 31, 2013 and December 31, 2012
may be found in the attached financial tables. Ixia has also posted on
its website supplemental financial information that contains its
financial performance by quarter for 2013. Such information can be found
in the investor relations section of our website at http://www.ixiacom.com.
Additional Information
As the company previously reported, certain errors in the company's
revenue recognition practices that affect the timing of the company's
recognition of revenue were identified which led to revenue being
recognized prematurely. Additional information regarding these matters
can be found in the company's Annual Report on Form 10-K filed today
with the SEC and in the company's Amendments on Form 10-Q/A to its
Quarterly Reports on Form 10-Q for the quarters ended March 31, 2013 and
June 30, 2013, both of which were also filed today with the SEC.
The correction of the revenue errors had the following impact on prior
periods:
-
Reduced total revenue by approximately $1.3 million and $3.9 million
for the quarters ended March 31, 2013 and June 30, 2013, respectively.
-
Increased deferred revenue by approximately $1.3 million and $5.2
million as of March 31, 2013 and June 30, 2013, respectively.
Ixia management remains focused on completing and filing of Ixia's
Quarterly Report on Form 10-Q for the quarter ended March 31, 2014 in
order for Ixia to become current with its periodic SEC filings. On June
12, 2014, the company appeared before a Nasdaq Hearings Panel (the
"Panel") regarding the potential delisting of Ixia's common stock from
the Nasdaq Global Select Market. At the hearing, the company presented a
plan, and requested an extension of time, to regain compliance with the
Nasdaq listing rule that requires the company to be current in the
filing of its periodic financial reports with the SEC. The Panel has the
discretion to grant or deny the company's request. We currently expect
the Panel to provide its decision within approximately 35 days following
the hearing.
Because of the company's delay in filing its Quarterly Report on Form
10-Q for the 2014 first quarter, Ixia management will not host a
conference call to discuss Ixia's 2013 fourth quarter or fiscal year
2013 financial results. The company expects to file in July its
Quarterly Report for the 2014 first quarter, after which the company
will hold a conference call.
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 (i.e., non-GAAP gross margin, non-GAAP operating expenses,
non-GAAP income from operations, non-GAAP net income, and non-GAAP
diluted earnings per share) that exclude certain non-cash and/or
non-recurring income and expense items such as proceeds and expenses
from certain legal and contractual settlements, realized gains for the
sale of certain of our previously impaired investments (e.g., auction
rate securities), expenses incurred in connection with our restatement
of certain previously filed financial statements, expenses relating to
an investigation by the Audit Committee of Ixia's Board of Directors and
related remediation efforts, stock-based compensation expenses,
acquisition and other related costs, restructuring expenses, the
amortization of acquisition-related intangible assets, and the related
income tax effects of these items, as well as certain other non-cash
income tax impacts such as changes in the valuation allowance recorded
against certain deferred tax assets. The aforementioned items represent
income and expense items that may be difficult to estimate from period
to period and/or that we believe 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
these items, 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 the attached financial tables.
About Ixia
Ixia develops amazing products so its customers can connect the
world. Ixia helps its customers provide an always-on user experience
through fast, secure delivery of dynamic, connected technologies and
services. Through actionable insights that accelerate and secure
application and service delivery, Ixia's customers benefit from faster
time to market, optimized application performance and higher-quality
deployments. Learn more at http://www.ixiacom.com.
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 the
hearing before the Panel, the relief that the Panel may grant the
company, the timing of the Panel's decision and the expected filing date
of the company's Quarterly Report on Form 10-Q for the first quarter of
2014, as well as statements regarding growth, profitability, financial
performance (including, for the first quarter of 2014, expectations
regarding revenue, non-GAAP gross margin, non-GAAP operating margin and
effective tax rate), and future business. In some cases, such
forward-looking statements can be identified by terms such as may, will,
should, expect, plan, believe, estimate, predict or the like. Such
statements reflect our current intent, belief and expectations and are
subject to risks and uncertainties that could cause our actual results
to differ materially from those expressed or implied in the
forward-looking statements. Factors that could cause the actual results
to differ materially from the results predicted include, among others,
whether the company will be in a position to regain compliance with the
Nasdaq listing rule that requires the timely filing of the company's
periodic financial reports with the SEC. Other factors that may cause
future results to differ materially from our current expectations
include the completion of our financial close processes for the first
quarter of 2014, uncertainty about the timing of the company's
completion of its Quarterly Report on Form 10-Q for the first quarter of
2014, the risk that the anticipated benefits and synergies of our 2012
acquisitions of Anue and BreakingPoint and our 2013 acquisition of Net
Optics will not be realized, changes in the global economy, competition,
consistency of orders from significant customers, our success in
developing and producing new products, our success in developing new
sales channels and customers, market acceptance of our products, war,
terrorism, political unrest, natural disasters and other circumstances
that could, among other consequences, reduce the demand for our
products, disrupt our supply chain and/or impact the delivery of our
products. Such factors also include those factors identified in our
Annual Report on Form 10-K for the year ended December 31, 2013, and in
our other filings with the SEC. 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)
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
2013
|
|
|
|
2012
|
|
|
|
|
|
Assets
|
|
|
|
|
Current assets:
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
34,189
|
|
|
$
|
47,508
|
Short-term investments in marketable securities
|
|
|
51,507
|
|
|
|
126,851
|
Accounts receivable, net
|
|
|
109,590
|
|
|
|
103,523
|
Inventories
|
|
|
47,136
|
|
|
|
37,220
|
Prepaid expenses and other current assets
|
|
|
42,096
|
|
|
|
42,942
|
Total current assets
|
|
|
284,518
|
|
|
|
358,044
|
|
|
|
|
|
Investments in marketable securities
|
|
|
-
|
|
|
|
3,119
|
Property and equipment, net
|
|
|
35,932
|
|
|
|
28,763
|
Intangible assets, net
|
|
|
189,949
|
|
|
|
157,003
|
Goodwill
|
|
|
371,832
|
|
|
|
260,457
|
Other assets
|
|
|
12,233
|
|
|
|
11,863
|
Total assets
|
|
$
|
894,464
|
|
|
$
|
819,249
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders' Equity
|
|
|
|
|
Current liabilities:
|
|
|
|
|
Accounts payable
|
|
$
|
19,011
|
|
|
$
|
12,114
|
Accrued expenses and other
|
|
|
53,748
|
|
|
|
52,525
|
Deferred revenues
|
|
|
89,217
|
|
|
|
66,096
|
Total current liabilities
|
|
|
161,976
|
|
|
|
130,735
|
|
|
|
|
|
Deferred revenues
|
|
|
15,106
|
|
|
|
8,695
|
Other liabilities
|
|
|
18,270
|
|
|
|
32,321
|
Convertible senior notes
|
|
|
200,000
|
|
|
|
200,000
|
Total liabilities
|
|
|
395,352
|
|
|
|
371,751
|
|
|
|
|
|
|
|
|
|
|
Shareholders' equity:
|
|
|
|
|
Common stock, without par value; 200,000 shares authorized at
December 31, 2013 and 2012; 76,849 and 74,126 shares issued and
outstanding as of December 31, 2013 and 2012, respectively
|
|
|
178,347
|
|
|
|
158,933
|
Additional paid-in capital
|
|
|
191,976
|
|
|
|
168,980
|
Retained earnings
|
|
|
129,166
|
|
|
|
117,296
|
Accumulated other comprehensive (loss) income
|
|
|
(377
|
)
|
|
|
2,289
|
Total shareholders' equity
|
|
|
499,112
|
|
|
|
447,498
|
|
|
|
|
|
Total liabilities and shareholders' equity
|
|
$
|
894,464
|
|
|
$
|
819,249
|
|
IXIA
|
Condensed Consolidated Statements of Operations
|
(in thousands, except per share data)
|
(unaudited)
|
|
|
|
Three months ended
|
|
|
Year ended
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2013
|
|
|
|
2012
|
|
|
|
|
2013
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
Products
|
|
$
|
90,348
|
|
|
$
|
98,304
|
|
|
|
$
|
352,712
|
|
$
|
330,315
|
|
Services
|
|
|
30,281
|
|
|
|
27,165
|
|
|
|
|
114,544
|
|
|
83,119
|
|
Total revenues
|
|
|
120,629
|
|
|
|
125,469
|
|
|
|
|
467,256
|
|
|
413,434
|
|
|
|
|
|
|
|
|
|
|
Costs and operating expenses:(1)
|
|
|
|
|
|
|
|
|
Cost of revenues - products(2)
|
|
|
26,322
|
|
|
|
22,157
|
|
|
|
|
89,136
|
|
|
71,668
|
|
Cost of revenues - services
|
|
|
3,303
|
|
|
|
2,898
|
|
|
|
|
13,867
|
|
|
10,493
|
|
Research and development
|
|
|
29,319
|
|
|
|
29,009
|
|
|
|
|
117,502
|
|
|
98,169
|
|
Sales and marketing
|
|
|
37,329
|
|
|
|
37,418
|
|
|
|
|
137,724
|
|
|
117,214
|
|
General and administrative
|
|
|
11,662
|
|
|
|
11,943
|
|
|
|
|
47,158
|
|
|
45,607
|
|
Amortization of intangible assets
|
|
|
10,552
|
|
|
|
10,655
|
|
|
|
|
40,805
|
|
|
30,018
|
|
Acquisition and other related
|
|
|
3,892
|
|
|
|
3,389
|
|
|
|
|
6,920
|
|
|
11,861
|
|
Restructuring
|
|
|
1,782
|
|
|
|
1,979
|
|
|
|
|
1,840
|
|
|
4,077
|
|
Total costs and operating expenses
|
|
|
124,161
|
|
|
|
119,448
|
|
|
|
|
454,952
|
|
|
389,107
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from operations
|
|
|
(3,532
|
)
|
|
|
6,021
|
|
|
|
|
12,304
|
|
|
24,327
|
|
Interest income and other, net
|
|
|
632
|
|
|
|
615
|
|
|
|
|
6,269
|
|
|
2,255
|
|
Interest expense
|
|
|
(1,942
|
)
|
|
|
(1,815
|
)
|
|
|
|
(7,771
|
)
|
|
(7,215
|
)
|
(Loss) income before income taxes
|
|
|
(4,842
|
)
|
|
|
4,821
|
|
|
|
|
10,802
|
|
|
19,367
|
|
Income tax expense (benefit)
|
|
|
(1,773
|
)
|
|
|
1,168
|
|
|
|
|
(1,068
|
)
|
|
(26,093
|
)
|
Net (loss) income
|
|
$
|
(3,069
|
)
|
|
$
|
3,653
|
|
|
|
$
|
11,870
|
|
$
|
45,460
|
|
|
|
|
|
|
|
|
|
|
(Loss) earnings per share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.04
|
)
|
|
$
|
0.05
|
|
|
|
$
|
0.16
|
|
$
|
0.63
|
|
Diluted
|
|
$
|
(0.04
|
)
|
|
$
|
0.05
|
|
|
|
$
|
0.15
|
|
$
|
0.59
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common and common equivalent shares
outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
|
76,593
|
|
|
|
73,746
|
|
|
|
|
75,757
|
|
|
72,183
|
|
Diluted
|
|
|
76,593
|
|
|
|
75,521
|
|
|
|
|
77,513
|
|
|
84,505
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Stock-based compensation included in:
|
|
|
|
|
|
|
|
|
Cost of revenues - products
|
|
$
|
140
|
|
|
$
|
167
|
|
|
|
$
|
550
|
|
$
|
423
|
|
Cost of revenues - services
|
|
|
53
|
|
|
|
63
|
|
|
|
|
209
|
|
|
162
|
|
Research and development
|
|
|
2,008
|
|
|
|
2,686
|
|
|
|
|
8,065
|
|
|
6,242
|
|
Sales and marketing
|
|
|
2,022
|
|
|
|
2,375
|
|
|
|
|
7,367
|
|
|
5,352
|
|
General and administrative
|
|
|
(449
|
)
|
|
|
2,316
|
|
|
|
|
4,571
|
|
|
7,462
|
|
|
(2) Cost of revenues - products exclude amortization of
intangible assets, related to purchased technology of $6.7 million
and $7.0 million, for the quarters ended December 31, 2013 and 2012,
respectively, and $26.0 million and $20.3 million for the years
ended December 31, 2013 and 2012, respectively, which is included in
Amortization of intangible assets.
|
|
IXIA
|
Non-GAAP Information and Reconciliation to Most Directly
Comparable GAAP Financial Measures
|
(in thousands, except per share data)
|
(unaudited)
|
|
|
|
Three months ended
December 31,
|
|
Year ended
December 31,
|
|
|
|
2013
|
|
|
|
2012
|
|
|
|
2013
|
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
GAAP gross margin
|
|
|
75.4
|
%
|
|
|
80.0
|
%
|
|
|
78.0
|
%
|
|
|
80.1
|
%
|
Adjustments:
|
|
|
|
|
|
|
|
|
Stock-based compensation(a)
|
|
|
0.2
|
%
|
|
|
0.2
|
%
|
|
|
0.1
|
%
|
|
|
0.2
|
%
|
Inventory adjustments(g)
|
|
|
0.4
|
%
|
|
|
0.5
|
%
|
|
|
0.1
|
%
|
|
|
0.2
|
%
|
Non-GAAP gross margin
|
|
|
76.0
|
%
|
|
|
80.7
|
%
|
|
|
78.2
|
%
|
|
|
80.5
|
%
|
|
|
|
|
|
|
|
|
|
GAAP operating expenses
|
|
$
|
94,536
|
|
|
$
|
94,393
|
|
|
$
|
351,949
|
|
|
$
|
306,946
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Stock-based compensation(a)
|
|
|
(3,581
|
)
|
|
|
(7,377
|
)
|
|
|
(20,003
|
)
|
|
|
(19,056
|
)
|
Amortization of intangible assets(b)
|
|
|
(10,552
|
)
|
|
|
(10,655
|
)
|
|
|
(40,805
|
)
|
|
|
(30,018
|
)
|
Acquisition and other related(c)
|
|
|
(3,892
|
)
|
|
|
(3,389
|
)
|
|
|
(6,920
|
)
|
|
|
(11,861
|
)
|
Restructuring(d)
|
|
|
(1,782
|
)
|
|
|
(1,979
|
)
|
|
|
(1,840
|
)
|
|
|
(4,077
|
)
|
Legal and contract settlements, and other(e)
|
|
|
(1,550
|
)
|
|
|
120
|
|
|
|
(1,397
|
)
|
|
|
(1,963
|
)
|
Non-GAAP operating expenses
|
|
$
|
73,179
|
|
|
$
|
71,113
|
|
|
$
|
280,984
|
|
|
$
|
239,971
|
|
|
|
|
|
|
|
|
|
|
GAAP (loss) income from operations
|
|
$
|
(3,532
|
)
|
|
$
|
6,021
|
|
|
$
|
12,304
|
|
|
$
|
24,327
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Stock-based compensation(a)
|
|
|
3,774
|
|
|
|
7,607
|
|
|
|
20,762
|
|
|
|
19,641
|
|
Amortization of intangible assets(b)
|
|
|
10,552
|
|
|
|
10,655
|
|
|
|
40,805
|
|
|
|
30,018
|
|
Acquisition and other related(c)
|
|
|
3,892
|
|
|
|
3,389
|
|
|
|
6,920
|
|
|
|
11,861
|
|
Restructuring(d)
|
|
|
1,782
|
|
|
|
1,979
|
|
|
|
1,840
|
|
|
|
4,077
|
|
Legal and contract settlements, and other(e)
|
|
|
1,550
|
|
|
|
(120
|
)
|
|
|
1,397
|
|
|
|
1,963
|
|
Inventory adjustments(g)
|
|
|
523
|
|
|
|
664
|
|
|
|
523
|
|
|
|
996
|
|
Non-GAAP income from operations
|
|
$
|
18,541
|
|
|
$
|
30,195
|
|
|
$
|
84,551
|
|
|
$
|
92,883
|
|
|
|
|
|
|
|
|
|
|
GAAP net (loss) income
|
|
$
|
(3,069
|
)
|
|
$
|
3,653
|
|
|
$
|
11,870
|
|
|
$
|
45,460
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Stock-based compensation(a)
|
|
|
3,774
|
|
|
|
7,607
|
|
|
|
20,762
|
|
|
|
19,641
|
|
Amortization of intangible assets(b)
|
|
|
10,552
|
|
|
|
10,655
|
|
|
|
40,805
|
|
|
|
30,018
|
|
Acquisition and other related(c)
|
|
|
3,892
|
|
|
|
3,389
|
|
|
|
6,920
|
|
|
|
11,861
|
|
Restructuring(d)
|
|
|
1,782
|
|
|
|
1,979
|
|
|
|
1,840
|
|
|
|
4,077
|
|
Legal and contract settlements, and other(f)
|
|
|
1,550
|
|
|
|
(120
|
)
|
|
|
(2,470
|
)
|
|
|
1,963
|
|
Inventory adjustments(g)
|
|
|
523
|
|
|
|
664
|
|
|
|
523
|
|
|
|
996
|
|
Income tax effect related to non-GAAP adjustments(h)
|
|
|
(7,055
|
)
|
|
|
(7,695
|
)
|
|
|
(23,794
|
)
|
|
|
(52,323
|
)
|
Non-GAAP net income
|
|
$
|
11,949
|
|
|
$
|
20,132
|
|
|
$
|
56,456
|
|
|
$
|
61,693
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP diluted (loss) earnings per share
|
|
$
|
(0.04
|
)
|
|
$
|
0.05
|
|
|
$
|
0.15
|
|
|
$
|
0.59
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Stock-based compensation(a)
|
|
|
0.05
|
|
|
|
0.10
|
|
|
|
0.27
|
|
|
|
0.23
|
|
Amortization of intangible assets(b)
|
|
|
0.14
|
|
|
|
0.14
|
|
|
|
0.53
|
|
|
|
0.36
|
|
Acquisition and other related(c)
|
|
|
0.05
|
|
|
|
0.04
|
|
|
|
0.09
|
|
|
|
0.14
|
|
Restructuring(d)
|
|
|
0.02
|
|
|
|
0.03
|
|
|
|
0.02
|
|
|
|
0.05
|
|
Legal and contract settlements, and other(f)
|
|
|
0.02
|
|
|
|
-
|
|
|
|
(0.03
|
)
|
|
|
0.02
|
|
Inventory adjustments(g)
|
|
|
0.01
|
|
|
|
0.01
|
|
|
|
0.01
|
|
|
|
0.01
|
|
Income tax effect related to non-GAAP adjustments(h)
|
|
|
(0.09
|
)
|
|
|
(0.10
|
)
|
|
|
(0.31
|
)
|
|
|
(0.62
|
)
|
Convertible senior notes(i)
|
|
|
(0.01
|
)
|
|
|
(0.02
|
)
|
|
|
(0.04
|
)
|
|
|
-
|
|
Non-GAAP diluted earnings per share
|
|
$
|
0.15
|
|
|
$
|
0.25
|
|
|
$
|
0.69
|
|
|
$
|
0.78
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in computing GAAP (loss) earnings per common share
|
|
|
76,593
|
|
|
|
75,521
|
|
|
|
77,513
|
|
|
|
84,505
|
|
Effect of reconciling item(i)(j)
|
|
|
11,534
|
|
|
|
10,224
|
|
|
|
10,218
|
|
|
|
(223
|
)
|
Shares used in computing non-GAAP diluted earnings per common
share
|
|
|
88,127
|
|
|
|
85,745
|
|
|
|
87,731
|
|
|
|
84,282
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
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.
|
|
|
|
(b)
|
|
This reconciling item represents the amortization of intangible
assets related to the acquisitions of various businesses and
technologies such as the acquisitions of Anue Systems, Inc.,
BreakingPoint Systems, Inc., and Net Optics, Inc. 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, we provide investors with
supplemental information that is useful in evaluating our ongoing
operations and performance. While the amortization of
acquisition-related 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.
|
|
|
|
(c)
|
|
This reconciling item represents costs associated with
acquisition-related activities. Acquisition and other related costs
consist primarily of transaction and integration related costs such
as success-based banking fees, professional fees for legal,
accounting, tax, due diligence, valuation and other related
services, change in control payments, amortization of deferred
compensation, consulting fees, required regulatory costs, certain
employee, facility and infrastructure costs, and other related
expenses. We believe that by excluding acquisition and other 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.
|
|
|
|
(d)
|
|
This reconciling item represents costs associated with our
restructuring/reorganization plans. During the third quarter of
2012, we initiated a plan to restructure our operations in light of
our acquisition of BreakingPoint Systems, Inc. ("BreakingPoint
Restructuring.") During the fourth quarter of 2013, we initiated a
plan to restructure certain of our operations related to our test
products. These restructuring costs primarily relate to one-time
employee termination benefits consisting of severance and other
related costs, and in the case of the BreakingPoint Restructuring,
included costs related to the closure of our office in Melbourne,
Australia. 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.
|
|
|
|
(e)
|
|
This reconciling item for 2013 represents $1.0 million of costs
incurred in the first six months of 2013 related to the April 2013
restatement of certain of our previously filed financial statements,
as well as $1.5 million of charges incurred in the fourth quarter of
2013 related to the Audit Committee investigation and remediation
efforts as a result of the resignation of our former CEO (Victor
Alston), partially offset by $1.2 million of proceeds from the
settlement of a previous legal matter in the first quarter of 2013.
The 2012 reconciling item included a charge of $1.7 million incurred
in the first quarter of 2012 in connection with the departure of our
former CEO (Atul Bhatnagar) and a one-time charge of $401,000
incurred in the second quarter of 2012 to settle a legal matter. We
believe that by excluding these non-recurring items, we are
providing our 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 reconciling item for 2013 and 2012 represents the reconciling
items noted in footnote (e), as well as $2.9 million and $1.0
million of realized gain recorded in the second and third quarter of
2013, respectively, for the sale of certain investment securities
that were previously written down. We believe that by excluding
these non-recurring items, we are providing our investors with
supplemental information that is useful in comparing our operating
results from period to period and in evaluating our core operations
and performance.
|
|
|
|
(g)
|
|
This reconciling item represents the amortization of the purchase
price accounting adjustment related to the fair value of inventory
as a result of our acquisitions. While we may have additional
amortization charges in the future resulting from 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.
|
|
|
|
(h)
|
|
This adjustment represents the income tax effects of the reconciling
items noted in footnotes (a), (b), (c), (d), (e), (f), and (g), as
well as certain other non-cash income tax impacts such as changes in
the valuation allowance relating to certain deferred tax assets.
|
|
|
|
(i)
|
|
This reconciling item for the non-GAAP diluted earnings per share
calculation includes the impact of the convertible senior notes as
these were anti-dilutive for the equivalent GAAP earnings per share
calculations (for all periods presented except for the year ended
December 31, 2012).
|
|
|
|
(j)
|
|
This adjustment represents the effects of stock-based compensation
on diluted common equivalent shares outstanding as well as any
adjustments required due to a change from a net loss to a net income
position.
|
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