[September 15, 2014] |
|
Ixia Announces Second Quarter 2014 Financial Results
CALABASAS, Calif. --(Business Wire)--
Ixia (Nasdaq: XXIA) today reported financial results for the
second quarter ended June 30, 2014 and filed its quarterly reports on
Form 10-Q with the SEC for the first and second quarters of 2014.
"We are pleased that we are now current in filing all required periodic
financial reports with the SEC," said Errol Ginsberg, Ixia's chairman
and chief innovation officer. "We would like to thank the investment
community and our shareholders for their patience and understanding as
we worked to become current with our financial reporting, and we look
forward to engaging with them in the months ahead.
"We would also like to express our gratitude to our employees who have
remained focused on executing throughout the leadership transition and
operational restructuring. Bethany Mayer will join the Ixia team as our
president and CEO effective tomorrow, and we are confident she brings
the right vision and leadership skills to build upon Ixia's strong
foundation and unique position in networking," continued Ginsberg.
Total second quarter 2014 revenue was $109.5 million, compared with
$112.0 million reported for the 2013 second quarter and $113.7 million
for the 2014 first quarter. The 2014 second quarter revenue includes
$13.3 million in revenue from Net Optics, Inc. ("Net Optics"), which was
acquired in December 2013.
On a GAAP basis, the company recorded a net loss for the 2014 second
quarter of $15.1 million, or $0.19 loss per diluted share, compared with
net income of $3.0 million, or $0.04 earnings per diluted share, for the
2013 second quarter. Non-GAAP net income for the 2014 second quarter was
$0.9 million, or $0.01 earnings per diluted share, compared with
non-GAAP net income of $11.8 million, or $0.15 earnings per diluted
share, for the 2013 second quarter.
Additional non-GAAP information and a reconciliation of Ixia's non-GAAP
measures to the most directly comparable GAAP measures for the 2014 and
2013 second quarters and year-to-date periods may be found in the
attached financial tables.
Ixia ended the 2014 second quarter with approximately $97 million in
cash, cash equivalents and investments, compared with approximately $92
million at March 31, 2014.
Conference Call and Webcast Information
Ixia will host a conference call on Wednesday, September 17, 2014 at
1:30 p.m. Pacific time (4:30 p.m. Eastern time) to discuss the company's
financial results for the 2014 second quarter and outlook and guidance
for the 2014 third quarter, including revenue and earnings guidance.
Open to the public, interested parties may access the call by dialing
(804) 681-3728. A live webcast 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 webcast, an archived version will be available in the
"Investors" section on the Ixia web site for at least 30 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 (i.e., 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, expenses relating to internal investigations
and any related remediation efforts, the restatement of our financial
statements for the first and second quarters of 2013 and for the six
months ended June 30, 2013, and the pending securities class action
against the company and certain of its current and former officers and
directors as well as shareholder derivative actions, 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.
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
company's 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, the risk that the company
will not realize all of the expected benefits of the previously
announced cost reduction program, the company's ability to implement the
cost reduction program as currently planned, 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.
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.
|
IXIA
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
|
|
|
|
|
|
|
|
June 30,
|
|
December 31,
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
|
|
|
Assets
|
|
|
|
|
Current assets:
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
39,030
|
|
|
$
|
34,189
|
|
Short-term investments in marketable securities
|
|
|
57,933
|
|
|
|
51,507
|
|
Accounts receivable, net of allowances of $763 and $840 as of June
30, 2014 and December 31, 2013, respectively
|
|
|
97,816
|
|
|
|
109,590
|
|
Inventories
|
|
|
45,986
|
|
|
|
47,136
|
|
Prepaid expenses and other current assets
|
|
|
59,394
|
|
|
|
48,514
|
|
Total current assets
|
|
|
300,159
|
|
|
|
290,936
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
37,042
|
|
|
|
35,932
|
|
Intangible assets, net
|
|
|
166,525
|
|
|
|
189,949
|
|
Goodwill
|
|
|
339,214
|
|
|
|
338,836
|
|
Other assets
|
|
|
28,095
|
|
|
|
32,070
|
|
Total assets
|
|
$
|
871,035
|
|
|
$
|
887,723
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders' Equity
|
|
|
|
|
Current liabilities:
|
|
|
|
|
Accounts payable
|
|
$
|
18,858
|
|
|
$
|
19,011
|
|
Accrued expenses and other
|
|
|
43,904
|
|
|
|
53,748
|
|
Deferred revenues
|
|
|
103,753
|
|
|
|
89,217
|
|
Total current liabilities
|
|
|
166,515
|
|
|
|
161,976
|
|
|
|
|
|
|
Deferred revenues
|
|
|
14,627
|
|
|
|
15,106
|
|
Other liabilities
|
|
|
12,682
|
|
|
|
11,529
|
|
Convertible senior notes
|
|
|
200,000
|
|
|
|
200,000
|
|
Total liabilities
|
|
|
393,824
|
|
|
|
388,611
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' equity:
|
|
|
|
|
Common stock, without par value; 200,000 shares authorized at June
30, 2014 and December 31, 2013; 77,792 and 76,849 shares issued and
outstanding as of June 30, 2014 and December 31, 2013, respectively
|
|
|
183,668
|
|
|
|
178,347
|
|
Additional paid-in capital
|
|
|
199,068
|
|
|
|
191,976
|
|
Retained earnings
|
|
|
94,617
|
|
|
|
129,166
|
|
Accumulated other comprehensive loss
|
|
|
(142
|
)
|
|
|
(377
|
)
|
Total shareholders' equity
|
|
|
477,211
|
|
|
|
499,112
|
|
|
|
|
|
|
Total liabilities and shareholders' equity
|
|
$
|
871,035
|
|
|
$
|
887,723
|
|
|
|
|
|
|
|
|
|
|
IXIA
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
|
|
|
|
Three months ended
|
|
Six months ended
|
|
|
June 30,
|
|
June 30,
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
Products
|
|
$
|
76,393
|
|
|
$
|
83,794
|
|
|
$
|
157,558
|
|
|
$
|
179,305
|
|
Services
|
|
|
33,129
|
|
|
|
28,210
|
|
|
|
65,697
|
|
|
|
54,158
|
|
Total revenues
|
|
|
109,522
|
|
|
|
112,004
|
|
|
|
223,255
|
|
|
|
233,463
|
|
|
|
|
|
|
|
|
|
|
Costs and operating expenses:(1)
|
|
|
|
|
|
|
|
|
Cost of revenues - products (2)
|
|
|
23,591
|
|
|
|
21,088
|
|
|
|
49,002
|
|
|
|
42,475
|
|
Cost of revenues - services
|
|
|
4,172
|
|
|
|
3,311
|
|
|
|
8,120
|
|
|
|
6,336
|
|
Research and development
|
|
|
30,032
|
|
|
|
29,068
|
|
|
|
60,067
|
|
|
|
58,780
|
|
Sales and marketing
|
|
|
39,874
|
|
|
|
32,983
|
|
|
|
78,713
|
|
|
|
68,024
|
|
General and administrative
|
|
|
16,690
|
|
|
|
11,507
|
|
|
|
34,572
|
|
|
|
23,565
|
|
Amortization of intangible assets
|
|
|
12,447
|
|
|
|
10,055
|
|
|
|
25,082
|
|
|
|
20,193
|
|
Acquisition and other related
|
|
|
866
|
|
|
|
1,093
|
|
|
|
2,798
|
|
|
|
2,365
|
|
Restructuring
|
|
|
481
|
|
|
|
-
|
|
|
|
4,045
|
|
|
|
58
|
|
Total costs and operating expenses
|
|
|
128,153
|
|
|
|
109,105
|
|
|
|
262,399
|
|
|
|
221,796
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from operations
|
|
|
(18,631
|
)
|
|
|
2,899
|
|
|
|
(39,144
|
)
|
|
|
11,667
|
|
Interest income and other, net
|
|
|
292
|
|
|
|
3,431
|
|
|
|
629
|
|
|
|
3,638
|
|
Interest expense
|
|
|
(1,943
|
)
|
|
|
(1,943
|
)
|
|
|
(3,886
|
)
|
|
|
(3,886
|
)
|
(Loss) income before income taxes
|
|
|
(20,282
|
)
|
|
|
4,387
|
|
|
|
(42,401
|
)
|
|
|
11,419
|
|
Income tax (benefit) expense
|
|
|
(5,205
|
)
|
|
|
1,370
|
|
|
|
(7,852
|
)
|
|
|
582
|
|
Net (loss) income
|
|
$
|
(15,077
|
)
|
|
$
|
3,017
|
|
|
$
|
(34,549
|
)
|
|
$
|
10,837
|
|
|
|
|
|
|
|
|
|
|
(Loss) earnings per share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.19
|
)
|
|
$
|
0.04
|
|
|
$
|
(0.45
|
)
|
|
$
|
0.14
|
|
Diluted
|
|
$
|
(0.19
|
)
|
|
$
|
0.04
|
|
|
$
|
(0.45
|
)
|
|
$
|
0.14
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common and common equivalent shares
outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
|
77,479
|
|
|
|
75,667
|
|
|
|
77,511
|
|
|
|
75,194
|
|
Diluted
|
|
|
77,479
|
|
|
|
77,178
|
|
|
|
77,511
|
|
|
|
76,974
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Stock-based compensation included in:
|
|
|
|
|
|
|
|
|
Cost of revenues - products
|
|
$
|
88
|
|
|
$
|
128
|
|
|
$
|
136
|
|
|
$
|
281
|
|
Cost of revenues - services
|
|
|
33
|
|
|
|
49
|
|
|
|
51
|
|
|
|
107
|
|
Research and development
|
|
|
1,424
|
|
|
|
1,578
|
|
|
|
3,303
|
|
|
|
4,026
|
|
Sales and marketing
|
|
|
1,493
|
|
|
|
1,628
|
|
|
|
3,421
|
|
|
|
3,643
|
|
General and administrative
|
|
|
48
|
|
|
|
1,159
|
|
|
|
993
|
|
|
|
3,364
|
|
|
|
|
|
|
|
|
|
|
(2) Cost of revenues - products excludes amortization of
intangible assets, related to product lines and purchased technologies
of $7.9 million and $16.1 million for the three and six months ended
June 30, 2014, respectively, and $6.4 million and $12.9 million for the
three and six months ended June 30, 2013, 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 June 30,
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
|
|
|
GAAP net (loss) income
|
|
$
|
(15,077
|
)
|
|
$
|
3,017
|
|
Adjustments:
|
|
|
|
|
Stock-based compensation(a)
|
|
|
3,086
|
|
|
|
4,542
|
|
Amortization of intangible assets(b)
|
|
|
12,447
|
|
|
|
10,055
|
|
Acquisition and other related(c)
|
|
|
866
|
|
|
|
1,093
|
|
Restructuring(d)
|
|
|
481
|
|
|
|
-
|
|
Investigations, shareholder litigation and related matters(e)
|
|
|
4,930
|
|
|
|
-
|
|
Legal and contract settlements and other(f)
|
|
|
-
|
|
|
|
(2,713
|
)
|
Income tax effect (g)
|
|
|
(5,878
|
)
|
|
|
(4,148
|
)
|
Non-GAAP net income
|
|
$
|
855
|
|
|
$
|
11,846
|
|
|
|
|
|
|
GAAP diluted (loss) earnings per share
|
|
$
|
(0.19
|
)
|
|
$
|
0.04
|
|
Adjustments:
|
|
|
|
|
Stock-based compensation(a)
|
|
|
0.04
|
|
|
|
0.06
|
|
Amortization of intangible assets(b)
|
|
|
0.16
|
|
|
|
0.13
|
|
Acquisition and other related(c)
|
|
|
0.01
|
|
|
|
0.01
|
|
Restructuring(d)
|
|
|
0.01
|
|
|
|
-
|
|
Investigations, shareholder litigation and related matters (e)
|
|
|
0.06
|
|
|
|
-
|
|
Legal and contract settlements and other(f)
|
|
|
-
|
|
|
|
(0.03
|
)
|
Income tax effect(g)
|
|
|
(0.08
|
)
|
|
|
(0.05
|
)
|
Convertible senior notes(h)
|
|
|
-
|
|
|
|
(0.01
|
)
|
Non-GAAP diluted earnings per share
|
|
$
|
0.01
|
|
|
$
|
0.15
|
|
|
|
|
|
|
Shares used in computing GAAP diluted earnings per common share
|
|
|
77,479
|
|
|
|
77,178
|
|
Effect of reconciling item(h)(i)
|
|
|
1,104
|
|
|
|
10,234
|
|
Shares used in computing non-GAAP diluted earnings per common
share
|
|
|
78,583
|
|
|
|
87,412
|
|
(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 professional fees for legal, accounting, tax, due diligence,
valuation and other related services, 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 fourth quarter of
2013, we initiated a plan to restructure certain of our operations
related to our test products. In the first quarter of 2014, we
initiated a plan to restructure certain of our operations following
our December 5, 2013 acquisition of Net Optics, Inc. These
restructuring costs primarily relate to one-time employee
termination benefits consisting of severance and other related
costs, as well as costs incurred to exit certain facilities. 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 the second quarter of 2014 represents
costs incurred related to (i) internal investigations and any
related remediation efforts, (ii) the June 2014 restatement of our
financial statements for the first quarter of 2013 and for the three
and six months ended June 30, 2013, and (iii) the securities class
action against the company and certain of its current and former
officers and directors as well as shareholder derivative actions.
These costs consisted primarily of legal and accounting fees,
recruiting and consulting expenses, severance and retention costs,
and other related expenses. We believe that by excluding these
non-recurring costs, 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 represents a $2.9 million realized gain
recorded during the second quarter of 2013 for the sale of certain
of our auction rate securities that were previously written-down,
partially offset by $156,000 of costs incurred in the second quarter
of 2013 related to the restatement of certain of our previously
filed financial statements. 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 adjustment represents the income tax effects of the reconciling
items noted in footnotes (a), (b), (c), (d), (e), and (f), as well
as certain other non-cash income tax impacts such as changes in the
valuation allowance relating to certain deferred tax assets.
|
|
|
(h)
|
This reconciling item for the non-GAAP diluted earnings per share
calculation includes the impact of our convertible senior notes as
these were anti-dilutive for the equivalent GAAP earnings per share
calculations for the second quarter of 2013.
|
|
|
(i)
|
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.
|
|
|
IXIA
Non-GAAP Information and Reconciliation to Most Directly
Comparable GAAP Financial Measures
(in thousands, except per share data)
(unaudited)
|
|
|
|
|
|
Six months ended June 30,
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
|
|
|
GAAP net (loss) income
|
|
$
|
(34,549
|
)
|
|
$
|
10,837
|
|
Adjustments:
|
|
|
|
|
Stock-based compensation(a)
|
|
|
7,904
|
|
|
|
11,421
|
|
Amortization of intangible assets(b)
|
|
|
25,082
|
|
|
|
20,193
|
|
Acquisition and other related(c)
|
|
|
2,798
|
|
|
|
2,365
|
|
Restructuring(d)
|
|
|
4,045
|
|
|
|
58
|
|
Investigations, shareholder litigation and related matters(e)
|
|
|
10,087
|
|
|
|
-
|
|
Legal and contract settlements and other(f)
|
|
|
-
|
|
|
|
(3,022
|
)
|
Inventory adjustments(g)
|
|
|
1,393
|
|
|
|
-
|
|
Income tax effect (h)
|
|
|
(11,156
|
)
|
|
|
(10,353
|
)
|
Non-GAAP net income
|
|
$
|
5,604
|
|
|
$
|
31,499
|
|
|
|
|
|
|
GAAP diluted (loss) earnings per share
|
|
$
|
(0.45
|
)
|
|
$
|
0.14
|
|
Adjustments:
|
|
|
|
|
Stock-based compensation(a)
|
|
|
0.10
|
|
|
|
0.15
|
|
Amortization of intangible assets(b)
|
|
|
0.32
|
|
|
|
0.26
|
|
Acquisition and other related(c)
|
|
|
0.04
|
|
|
|
0.03
|
|
Restructuring(d)
|
|
|
0.05
|
|
|
|
-
|
|
Investigations, shareholder litigation and related matters(e)
|
|
|
0.13
|
|
|
|
-
|
|
Legal and contract settlements and other(f)
|
|
|
-
|
|
|
|
(0.04
|
)
|
Inventory adjustments(g)
|
|
|
0.02
|
|
|
|
-
|
|
Income tax effect(h)
|
|
|
(0.14
|
)
|
|
|
(0.14
|
)
|
Convertible senior notes(i)
|
|
|
-
|
|
|
|
(0.02
|
)
|
Non-GAAP diluted earnings per share
|
|
$
|
0.07
|
|
|
$
|
0.38
|
|
|
|
|
|
|
Shares used in computing GAAP diluted earnings per common share
|
|
|
77,511
|
|
|
|
76,974
|
|
Effect of reconciling item(i)(j)
|
|
|
1,108
|
|
|
|
10,757
|
|
Shares used in computing non-GAAP diluted earnings per common
share
|
|
|
78,619
|
|
|
|
87,731
|
|
(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 professional fees for legal, accounting, tax, due
diligence, valuation and other related services, 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 fourth quarter of
2013, we initiated a plan to restructure certain of our operations
related to our test products. In the first quarter of 2014, we
initiated a plan to restructure certain of our operations following
our December 5, 2013 acquisition of Net Optics, Inc. These
restructuring costs primarily relate to one-time employee
termination benefits consisting of severance and other related
costs, as well as costs incurred to exit certain facilities. 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 the first six months of 2014 represents
costs incurred related to (i) internal investigations and any
related remediation efforts, (ii) the June 2014 restatement of our
financial statements for the first quarter of 2013 and for the three
and six months ended June 30, 2013, and (iii) the securities class
action against the company and certain of its current and former
officers and directors as well as shareholder derivative actions.
These costs consisted primarily of legal and accounting fees,
recruiting and consulting expenses, severance and retention costs,
and other related expenses. We believe that by excluding these
non-recurring costs, 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 represents a $2.9 million realized gain
recorded during the second quarter of 2013 for the sale of certain
of our auction rate securities that were previously written down and
$1.2 million of proceeds from the settlement of a previous legal
matter in the first quarter of 2013, partially offset by $1.0
million of costs incurred in the first six months of 2013 related to
the restatement of certain of our previously filed financial
statements. 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 acquisition of Net Optics, Inc. 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 our convertible senior notes as
these were anti-dilutive for the equivalent GAAP earnings per share
calculations for the three and six months ended June 30, 2013.
|
|
|
(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.
|
[ Back To TMCnet.com's Homepage ]
|