Science & Technology
Tue, June 23, 2009Mon, June 22, 2009Sun, June 21, 2009Sat, June 20, 2009Fri, June 19, 2009Thu, June 18, 2009Wed, June 17, 2009Tue, June 16, 2009Mon, June 15, 2009Sun, June 14, 2009Fri, June 12, 2009Thu, June 11, 2009Wed, June 10, 2009Tue, June 9, 2009Mon, June 8, 2009Sun, June 7, 2009Fri, June 5, 2009Thu, June 4, 2009Wed, June 3, 2009Tue, June 2, 2009Finisar: Finisar Corporation Announces Fourth Quarter and Fiscal 2009 Financial Results
Published in Science and Technology on Thursday, June 11th 2009 at 13:11 GMT, Last Modified on 2009-06-11 13:19:56 by Market Wire
SUNNYVALE, CA--(Marketwire - June 11, 2009) - Finisar Corporation (
FINISAR FINANCIAL HIGHLIGHTS -- FOURTH QUARTER ENDED APRIL 30, 2009
GAAP GAAP Non-GAAP(a) Non-GAAP(a) Fourth Fourth Fourth Fourth Quarter Quarter Quarter Quarter April 30, April 30, April 30, April 30, 2009 2008 2009 2008 ---------- ---------- ----------- ----------- (in thousands, except per share data) Optical products revenues $ 107,457 $ 111,378 $ 107,457 $ 111,378 Network test products revenues $ 9,207 $ 9,627 $ 9,207 $ 9,627 Total revenues $ 116,664 $ 121,005 $ 116,664 $ 121,005 Gross margin 25.4 % 32.9 % 30.8% 37.4% Before impairment charges: Operating expenses $ 39,278 $ 40,112 $ 35,636 $ 36,325 Income (loss) from operations $ (9,625) $ (303) $ 279 $ 8,922 Operating margin (8.3)% (0.3)% 0.2% 7.4% Goodwill impairment charge $ 13,390 $ 40,106 $ - $ - Net income (loss) $ (24,201) $ (44,108) $ (958) $ 7,150 Net income (loss) per share - basic $ (0.05) $ (0.14) $ 0.00 $ 0.02 Net income (loss) per share - diluted $ (0.05) $ (0.14) $ 0.00 $ 0.02 Shares - basic 476,972 308,786 476,972 308,786 Shares - diluted 476,972 308,786 476,972 310,129
(a) In evaluating the operating performance of Finisar's business, Finisar management utilizes financial measures that exclude certain charges and credits required by generally accepted accounting principles, or GAAP, that are considered by management to be outside Finisar's core operating results. A reconciliation of Finisar's non-GAAP financial measures to the most directly comparable GAAP measures as well as additional related information can be found under the heading "Finisar Non-GAAP Financial Measures" below.
Highlights for the quarter included:
-- Total revenues decreased to $116.7 million, down $19.7 million, or 14.4%, from $136.4 million in the preceding quarter and down $4.3 million, or 3.6%, from $121.0 million in the fourth quarter of the prior year; -- Optics revenues decreased to $107.5 million, down $18.6 million, or 14.8%, from $126.1 million in the preceding quarter and down $3.9 million, or 3.5%, from $111.4 million in the fourth quarter of the prior year. Excluding approximately $25.1 million of additional revenues in the quarter as a result of the Optium merger completed on August 29, 2008, optics revenues of $82.4 were down $29.0 million, or 26.1% from $111.4 million in the fourth quarter of the prior year; -- Revenues from the sale of products for 10/40 Gbps applications decreased to $40.6 million, down $8.5 million, or 17.3%, from $49.1 million in the preceding quarter but increased $9.4 million, or 30.1%, from $31.2 million in the fourth quarter of the prior year primarily due to the Optium merger; -- Network Test revenues decreased to $9.2 million, down $1.1 million, or 10.4%, from $10.3 million in the preceding quarter, and decreased $0.4 million, or 4.4%, from $9.6 million in the fourth quarter of the prior year; -- Gross margin was 25.4%, a decrease from 30.2% in the preceding quarter and from 32.9% in the fourth quarter of the prior year, due in part to a charge for the impairment of current technology associated with a previous acquisition and higher per unit manufacturing costs as a result of lower unit shipment levels; -- Operating loss before a charge for goodwill impairment and the impairment of current technology was $8.4 million, or (7.2)% of revenues, compared to an operating loss of $3.2 million, or (2.4)% of revenues, in the preceding quarter and $0.3 million, or (0.3)% of revenues, in the fourth quarter of the prior year; -- A charge of $13.4 million for the impairment of the remaining balance of goodwill was recognized following the completion of an analysis of all goodwill, which was in addition to an estimated charge of $225.3 million recorded in previous quarters; -- A net loss of $24.2 million, or $(0.05) per share, compared to a net loss of $47.4 million, or $(0.10) per share, in the preceding quarter and a net loss of $44.1 million, or $(0.14) per share, in the fourth quarter of the prior year; and -- Cash and short-term investments, plus other long-term investments that can be readily converted into cash, totaled $37.2 million at the end of the fourth quarter compared to $35.3 million at the end of the prior quarter. The Company continues to maintain a secured credit facility totaling $45.0 million under which no borrowings were outstanding at the end of the quarter. Approximately $25 million was available to borrow under this secured credit facility pursuant to covenants that were modified as of the end of the quarter. Additional lines of credit covering the sale of accounts receivable and standby letters of credit were fully utilized as of the end of the quarter. Finisar has classified certain of its investments as long-term based on its intent to hold these securities until maturity, although they can be readily sold if required.
In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, Finisar provides supplemental information regarding its operating performance on a non-GAAP basis. Finisar believes this additional information provides investors and management with additional insight into its underlying core operating performance by excluding a number of non-cash and cash charges as well as gains or losses principally related to acquisitions, the sale of minority investments, restructuring or other transition activities, impairments and financing transactions. For the fourth quarter of fiscal 2009, these excluded items included, among other items described in Finisar Non-GAAP Financial Measures below, a non-cash charge of $13.4 million for the impairment of goodwill; $4.0 million in non-cash stock-based compensation expense; $2.4 million in amortization charges related to acquired developed technology and purchased intangibles arising from previous acquisitions; a $2.5 million non-cash charge for slow moving and obsolete inventory; and $0.9 million associated with the cost of reductions in force.
Excluding these items:
-- Non-GAAP gross margins decreased to 30.8%, compared to 31.4% in the preceding quarter and 37.4% in the fourth quarter of the prior year. The sequential decrease in non-GAAP gross margin reflects the impact of lower shipment levels and higher per unit manufacturing costs, and the decrease compared to the prior year also reflects the impact of the Optium merger ahead of additional manufacturing cost synergies expected to be realized over the next three quarters; -- Non-GAAP operating expenses were $35.6 million in the fourth quarter, a decrease of $4.1 million, or 10.4%, on a sequential basis and a decrease of $8.4 million, or 19.1%, compared to the second quarter during which the Optium merger was completed. The reduction in operating expenses reflects the full impact of operating cost synergies associated with the merger in addition to other actions undertaken to reduce costs including: -- Reduction in salaries totaling 10% for officers, directors and most employees starting in February 2009; and -- Suspension of 401(k) matching Company contributions. -- Non-GAAP operating income was $0.3 million, or 0.2% of revenues, down from $3.1 million, or 2.3% of revenues, in the preceding quarter, from $8.9 million, or 7.4% of revenues, in the fourth quarter of the prior year. The decrease in operating income from the previous quarter was due primarily to lower gross profit levels which declined by $6.9 million, or 16.1%, from the preceding quarter, while operating expenses declined $4.1 million, or 10.4%. Similarly, gross profit declined by $9.3 million compared to the fourth quarter of the prior year while operating expenses declined by $0.7 million despite the impact of additional operating expenses associated with the Optium merger; -- Non-GAAP net loss was $1.0 million, or $(0.00) per diluted share, compared to net income of $2.3 million, or $0.00 per diluted share, in the preceding quarter and net income of $7.2 million, or $0.02 per diluted share, in the fourth quarter of the prior year; and -- Non-GAAP EBITDA was $8.2 million, down only $3.0 million from the prior quarter despite a decrease of $19.7 million in total revenues, reflecting the impact of operating cost synergies arising from the Optium merger and additional cost reductions as noted above.
"We previously indicated that we believed that fourth quarter revenues would represent the low point for us in this economic downturn," said Jerry Rawls, Finisar's executive Chairman of the Board. "Based on order trends that have seen a marked improvement during the last several weeks, it appears that assessment was correct and that revenues for the upcoming first quarter should increase over the fourth quarter just ended."
"We have seen combined revenues decline by approximately $58 million, or 33%, since the record high for both companies just prior to the merger in the July quarter," said Eitan Gertel, Finisar's Chief Executive Officer. "And yet, despite this decline in revenues, we continue to generate EBITDA in excess of our capital expenditure requirements as a result of synergies from the merger and the additional cost reductions that have been implemented."
FINISAR FINANCIAL HIGHLIGHTS -- FISCAL YEAR ENDED APRIL 30, 2009
GAAP GAAP Non-GAAP(a) Non-GAAP(a) Fiscal Year Fiscal Year Fiscal Year Fiscal Year April 30, April 30, April 30, April 30, 2009 2008 2009 2008 ---------- ---------- ----------- ----------- (in thousands, except per share data) Optical products revenues $ 497,058 $ 401,625 $ 497,058 $ 401,625 Network test products revenues $ 44,179 $ 38,555 $ 44,179 $ 38,555 Total revenues $ 541,237 $ 440,180 $ 541,237 $ 440,180 Gross margin 31.1 % 32.2 % 34.6% 37.2% Before impairment charges: Operating expenses $ 183,751 $ 162,008 $ 157,480 $ 138,678 Income (loss) from operations $ (15,373) $ (20,490) $ 29,546 $ 24,906 Operating margin (2.8)% (4.7)% 5.5% 5.7% Goodwill impairment charge $ 238,692 $ 40,106 $ - $ - Net income (loss) $ (254,383) $ (74,558) $ 22,529 $ 17,368 Net income (loss) per share - basic $ (0.61) $ (0.24) $ 0.05 $ 0.06 Net income (loss) per share - diluted $ (0. 61) $ (0.24) $ 0.05 $ 0.05 Shares - basic 420,456 308,680 420,456 308,680 Shares - diluted 420,456 308,680 425,996 318,949
(a) In evaluating the operating performance of Finisar's business, Finisar management utilizes financial measures that exclude certain charges and credits required by generally accepted accounting principles, or GAAP, that are considered by management to be outside Finisar's core operating results. A reconciliation of Finisar's non-GAAP financial measures to the most directly comparable GAAP measures as well as additional related information can be found under the heading "Finisar Non-GAAP Financial Measures" below.
Highlights for the fiscal year included:
-- Total revenues increased to $541.2 million, up $101.1 million, or 23.0%, from $440.2 million in the prior year; -- Optics revenues increased to $497.1 million, up $95.4 million, or 23.8% from $401.6 million in the prior year. Approximately $91.3 million of the increase in revenues was related to the Optium merger; -- Network Test revenues increased to $44.2 million, up $5.6 million, or 14.6%, from $38.6 million in the prior year; -- Gross margin of 31.1% decreased from 32.2% in the prior year due primarily to a charge for the impairment of current technology associated with a previous acquisition, an unfavorable product mix between Optics and Network Tools and the impact of the Optium merger; -- Operating loss before a charge for goodwill impairment was $15.4 million, or (2.8)% of revenues, compared to an operating loss of $20.5 million, or (4.7)% of revenues, in the prior year; -- Total goodwill impairment charges of $238.7 million were recognized during the year as a result of a deterioration in the macroeonomic environment just as the Optium merger was being completed; and -- Net loss of $254.4 million compared to a net loss of $74.6 million in the prior year primarily due to charges for the impairment of goodwill.
Items excluded under Finisar's Non-GAAP financial measures include, among other items, a non-cash charge of $238.7 million for the impairment of goodwill; $15.0 million in non-cash stock compensation expense; $8.7 million in amortization charges related to acquired developed technology and purchased intangibles arising from previous acquisitions; a $6.0 million non-cash charge for slow moving and obsolete inventory; a $2.0 million non-cash charge associated with a loss on foreign currency movements; a $1.8 million non-cash charge for the amortization of convertible debt discount associated with the issuance of one series of the Company's convertible notes; and $1.7 million associated with the cost of reductions in force. These charges were partially offset by a $7.8 million non-cash credit related to the timing of tax payments; a nonrecurring gain of $3.8 million associated with the repurchase of outstanding convertible notes prior to their maturity.
Excluding these items:
-- Non-GAAP gross margin decreased to 34.6%, compared to 37.2% in the prior year; -- Non-GAAP operating expenses were $157.5 million, an increase of $18.8 million, or 13.6%, over the prior year; -- Non-GAAP operating income was $29.5 million, or 5.5% of revenues, an increase of $4.6 million from $24.9 million, or 5.7% of revenues, in the prior year; -- Non-GAAP net income was $22.5 million, or $0.05 per diluted share, compared to net income of $17.4 million, or $0.05 per diluted share, in the prior year; and -- Non-GAAP EBITDA was $59.4 million, an increase of $9.7 million from the prior year, and exceeded total capital expenditures of $23.9 million for the year.
CONFERENCE CALL
Finisar will discuss these financial statements and its current business outlook during its regular quarterly conference call scheduled for today, June 11, 2009, at 2:00 p.m. PDT/5:00 EDT. To listen to the call you may connect through the investor page of Finisar at [ www.finisar.com ] or dial 866-393-6455 (domestic) or 706-634-9717 (international) and enter conference ID 13765097.
A replay of the webcast will be available shortly after the conclusion of the call on the Company's website until the next conference call to be held approximately 90 days from today. An audio replay of the call will be accessible to the public by calling (800) 642-1687 (domestic) or (706) 645-9291 (international) and then, following the prompts, enter conference ID 13765097 and record your name, affiliation, and contact number. The audio replay will be available for two weeks following the call.
SAFE HARBOR UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
The statements contained in this press release that are not purely historical are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. All forward-looking statements included in this press release are based upon information available to Finisar as of the date hereof, and Finisar assumes no obligation to update any such forward-looking statements. Forward-looking statements involve risks and uncertainties which could cause actual results to differ materially from those projected. Examples of such risks include those associated with: the uncertainty of customer demand for Finisar's products; the rapidly evolving markets for Finisar's products and uncertainty regarding the development of these markets; Finisar's historical dependence on sales to a limited number of customers and fluctuations in the mix of products and customers in any period; ongoing new product development and introduction of new and enhanced products; the challenges of rapid growth followed by periods of contraction; and intensive competition. Additional risks include the potential impact of pending civil litigation arising from the investigation of Finisar's historical option granting practices. Further information regarding these and other risks relating to Finisar's business is set forth in Finisar's quarterly report on Form 10-Q (filed March 12, 2009).
ABOUT FINISAR
Finisar Corporation (
FINISAR FINANCIAL STATEMENTS
The following financial tables are presented in accordance with GAAP.
Finisar Corporation Consolidated Statements of Operations Three Months Three Months Ended Twelve Months Ended Ended April 30, April 30, April 30, April 30, February 2009 2008* 2009 2008* 1, 2009 ---------- ----------- ----------- ---------- ---------- (Unaudited) (Unaudited) (Unaudited) (in thousands, except (in thousands, except share and per share share and per share data) data) Revenues Optical subsystems and components $ 107,457 $ 111,378 $ 497,058 $ 401,625 $ 126,081 Network test systems 9,207 9,627 44,179 38,555 10,274 ---------- ----------- ----------- ---------- ---------- Total revenues 116,664 121,005 541,237 440,180 136,355 Cost of revenues 84,178 79,882 365,572 292,161 93,491 Impairment of acquired developed technology 1,248 - 1,248 - - Amortization of acquired developed technology 1,585 1,314 6,039 6,501 1,705 ---------- ----------- ----------- ---------- ---------- Gross profit 29,653 39,809 168,378 141,518 41,159 Gross margin 25.4% 32.9% 31.1% 32.2% 30.2% Operating expenses: Research and development 22,318 20,194 92,057 76,544 24,098 Sales and marketing 7,650 10,280 37,747 40,006 9,396 General and administra- tive 8,486 9,358 40,761 43,710 10,050 Acquired in-process research and development - - 10,500 - - Amortization of purchased intangibles 824 280 2,686 1,748 841 Impairment of goodwill and intangible assets 13,390 40,106 238,692 40,106 46,534 ---------- ----------- ----------- ---------- ---------- Total operating expenses 52,668 80,218 422,443 202,114 90,919 ---------- ----------- ----------- ---------- ---------- Loss from operations (23,015) (40,409) (254,065) (60,596) (49,760) Interest income 18 1,352 1,762 5,805 119 Interest expense (1,332) (4,341) (9,687) (17,236) (1,469) Gain on debt extinguish- ment - - 3,838 - 4,070 Other income (expense), net (15) (560) (3,803) (298) (749) ---------- ----------- ----------- ---------- ---------- Loss before income taxes (24,344) (43,958) (261,955) (72,325) (47,789) Provision (benefit) for income taxes (143) 150 (7,572) 2,233 (432) ---------- ----------- ----------- ---------- ---------- Net loss $ (24,201) $ (44,108) $ (254,383) $ (74,558) $ (47,357) ========== =========== =========== ========== ========== Net loss per share - basic and diluted $ (0.05) $ (0.14) $ (0.61) $ (0.24) $ (0.10) ========== =========== =========== ========== ========== Shares used in computing net loss per share - basic and diluted 476,972 308,786 420,456 308,680 474,797 *Adjusted to reflect adoption of new accounting principle. Finisar Corporation Consolidated Balance Sheets (In thousands) Memo Optium balance sheet upon merger April 30, February 1, April 30, (August 29, 2009 2009 2008 2008) ---------- ---------- ---------- ---------- (unaudited) (unaudited) (unaudited) Current assets: Cash and cash equivalents $ 37,129 $ 34,645 $ 79,442 $ 31,825 Short-term available-for-sale investments 92 301 27,776 - Short-term available-for-sale investments - equity - - 2,801 - Accounts receivable, net 81,820 84,344 48,005 29,094 Accounts receivable, other 10,033 8,780 12,408 - Inventories 112,300 116,057 82,554 34,283 Prepaid expenses 7,959 8,191 7,652 856 ---------- ---------- ---------- ---------- Total current assets 249,333 252,318 260,638 96,058 Long-term available-for-sale investments - debt - 313 9,236 - Property, plant and improvements, net 84,040 88,543 89,847 19,129 Purchased technology, net 16,663 19,495 11,850 12,192 Other intangible assets, net 14,316 15,141 3,899 13,000 Goodwill - 13,892 88,242 150,115 Minority investments 14,289 14,289 13,250 - Other assets 2,897 3,204 3,241 796 ---------- ---------- ---------- ---------- Total assets $ 381,538 $ 407,195 $ 480,203 $ 291,290 ========== ========== ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 48,421 $ 49,786 $ 43,040 $ 29,663 Accrued compensation 11,428 12,774 14,397 1,483 Other accrued liabilities 30,713 28,070 23,397 15,859 Deferred revenue 4,663 4,977 5,312 - Current portion of Convertible notes - - 101,918 - Current portion of long-term debt 6,107 6,060 2,012 - Current portion of other long-term liabilities - - 424 - Non-cancelable purchase obligations 2,965 3,420 3,206 - ---------- ---------- ---------- ---------- Total current liabilities 104,297 105,087 193,706 47,005 Long-term liabilities: Convertible notes 142,000 142,000 150,000 - Long-term debt 15,305 16,857 3,626 - Other long-term liabilities 3,161 8,447 15,285 973 Deferred income taxes 1,986 1,190 8,903 - ---------- ---------- ---------- ---------- Total long-term liabilities 162,452 168,494 177,814 973 Stockholders' equity: Common stock 477 477 309 161 Additional paid-in capital 1,810,873 1,806,732 1,540,241 253,651 Accumulated other comprehensive income 2,662 1,427 12,973 - Accumulated deficit (1,699,223) (1,675,022) (1,444,840) (10,500) ---------- ---------- ---------- ---------- Total stockholders' equity 114,789 133,614 108,683 243,312 ---------- ---------- ---------- ---------- Total liabilities and stockholders' equity $ 381,538 $ 407,195 $ 480,203 $ 291,290 ========== ========== ========== ==========
FINISAR NON-GAAP FINANCIAL MEASURES
In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, Finisar provides supplemental information regarding the Company's operating performance on a non-GAAP basis that excludes certain gains, losses and charges of a non-cash nature or which occur relatively infrequently and which management considers to be outside our core operating results. Some of these non-GAAP measures also exclude the ongoing impact of historical business decisions made in different business and economic environments. Management believes that tracking non-GAAP gross profit, non-GAAP income from operations, non-GAAP net income and non-GAAP net income per share provides management and the investment community with valuable insight into our current operations, our ability to generate cash and the underlying business trends which are affecting our performance. These non-GAAP measures are used by both management and our Board of Directors, along with the comparable GAAP information, in evaluating our current performance and planning our future business activities. In particular, management finds it useful to exclude non-cash charges in order to better correlate our operating activities with our ability to generate cash from operations and to exclude non-recurring and infrequently incurred cash charges as a means of more accurately predicting our liquidity requirements. We believe that these non-GAAP measures, when used in conjunction with our GAAP financial information, also allow investors to better evaluate our financial performance in comparison to other periods and to other companies in our industry.
In calculating non-GAAP gross profit, we have excluded the following items from cost of revenues in applicable periods:
-- Changes in excess and obsolete inventory reserve (predominantly non- cash charges or non-cash benefits); -- Amortization of acquired technology (non-cash charges related to technology obtained in acquisitions); -- Duplicate facility costs during facility move (non-recurring charges); -- Stock-based compensation expense (non-cash charges); -- Purchase accounting adjustment for sale of acquired inventory (non- cash and non-recurring charges); and -- Reduction in force costs (non-recurring charges).
In calculating non-GAAP operating income, we have excluded the same items to the extent they are classified as operating expenses, and have also excluded the following items in applicable periods:
-- Options investigation costs included in general and administrative expense (non-recurring cash charges related to the special investigation into our historical stock option granting practices) and the cost of covering employee and employer tax liabilities (non-recurring cash charges) arising from that investigation recorded in each line of the income statement; -- Disposal of a product line (non-recurring charges); -- Acquired in-process research and development expense (non-recurring and non-cash charges); -- Amortization of purchased intangibles (non-cash charges related to prior acquisitions); and -- Impairment charges associated with intangible assets (non-cash and non- recurring).
In calculating non-GAAP net income and non-GAAP net income per share, we have also excluded the following items in applicable periods:
-- Amortization of discount on convertible debt (non-cash charges); -- Gains and losses on debt extinguishment (non-recurring and non-cash charges or income); -- Gains and losses on sales of assets (non-recurring or non-cash losses and cash gains related to the periodic disposal of assets no longer required for current activities); -- Gains and losses on minority investments (infrequently occurring and principally non-cash gains and losses related to the disposal of investments in other companies and non-cash income or loss from these investments accounted for under the equity method); -- Foreign exchange transaction loss (non-recurring and non-cash charges); -- Tax charges arising from timing difference related to asset purchases (non-cash provision); and -- Cumulative effect of change in accounting principle (non-recurring and non-cash charges or income).
A reconciliation of this non-GAAP financial information to the corresponding GAAP information is set forth below:
Finisar Corporation Reconciliation of Results of Operations under GAAP and non-GAAP Three Months Twelve Months Three Months Ended Ended Ended April April January 30, 30, April 27, February 1, 2009 2008* 30, 2009 2008* 2009 ------ ------- -------- ------- -------------- (Unaudited) (Unaudited) (Unaudited) (in thousands, (in thousands, except per except per share share data) data) Reconciliation of GAAP Gross Profit to non-GAAP Gross Profit: Gross profit per GAAP 29,653 39,809 168,378 141,518 41,159 Gross margin, GAAP 25.4% 32.9% 31.1% 32.2% 30.2% Adjustments: Cost of revenues Change in excess and obsolete inventory reserve 2,495 3,021 6,038 9,375 (957) Amortization of acquired technology 1,584 1,314 6,038 6,501 1,705 Duplicate facility costs during facility move - 296 287 296 - Stock compensation 870 771 3,387 3,091 797 Acquisition related compensation - 27 - 67 - Costs related to options investigation (282) - (282) 1,084 - Impairment of acquired developed technology 1,248 - 1,248 - - Purchase accounting adjustment for sale of acquired inventory - - 1,402 1,306 - Reduction in force costs 347 9 530 346 128 ------ ------- -------- ------- -------------- Total cost of revenue adjustments 6,262 5,438 18,648 22,066 1,673 Gross profit, non-GAAP 35,915 45,247 187,026 163,584 42,832 Gross margin, non-GAAP 30.8% 37.4% 34.6% 37.2% 31.4% Reconciliation of GAAP operating loss to non-GAAP operating income (loss): Operating loss per GAAP (23,015) (40,409) (254,065) (60,596) (49,760) Operating margin, GAAP -19.7% -33.4% -46.9% -13.8% -36.5% Adjustments: Total cost of revenue adjustments 6,262 5,438 18,648 22,066 1,673 Research and development Reduction in force costs 270 12 457 40 111 Stock compensation 1,743 1,139 6,338 4,377 1,816 Acquisition related compensation - 499 - 1,247 - Costs related to options investigation (347) - (347) 1,648 - Sales and marketing Reduction in force costs 187 87 412 170 125 Stock compensation 547 482 2,141 2,048 561 Acquisition related compensation - 85 - 213 - Costs related to options investigation (121) - (121) 742 - General and administrative Reduction in force costs 111 - 328 6 217 Stock compensation 859 586 3,113 2,048 958 Acquistion related compensation - 110 - 274 - Costs related to options investigation (431) 507 (155) 8,769 - Disposal of a product line - - 919 - - Amortization of purchased intangibles 825 280 2,687 1,748 841 Acquired in-process R&D - - 10,500 - - Impairment of intangible assets 13,390 40,106 238,692 40,106 46,534 ------ ------- -------- ------- -------------- Total cost of revenue and operating expense adjustments 23,295 49,331 283,612 85,502 52,836 Operating income, non-GAAP 280 8,922 29,547 24,906 3,076 Operating margin, non-GAAP 0.2% 7.4% 5.5% 5.7% 2.3% Reconciliation of GAAP net loss to non-GAAP net income (loss): Net loss per GAAP (24,201) (44,108) (254,383) (74,558) (47,357) Total cost of revenue and operating expense adjustments 23,295 49,331 283,612 85,502 52,836 Amortization of discount on convertible debt - 1,236 1,817 4,942 - Loss on debt extinguishment - 74 (3,839) 74 (4,070) Other expense, net Loss (gain) on sale of assets 497 (61) 994 (519) 104 Loss (gain) on minority investments - 1,355 797 1,149 - Other misc income (17) (650) (575) (977) - Foreign exchange transaction loss (532) - 1,953 - 756 Provision for income tax Timing difference related to asset purchases - (27) (7,847) 1,755 - ------ ------- -------- ------- -------------- Total adjustments 23,243 51,258 276,912 91,926 49,626 ------ ------- -------- ------- -------------- Net income (loss), non-GAAP $ (958) $ 7,150 $ 22,529 $17,368 $ 2,269 ====== ======= ======== ======= ============== Net income (loss), non-GAAP per share - basic $(0.00) $ 0.02 $ 0.05 $ 0.06 $ 0.00 Net income (loss), non-GAAP per share - diluted $(0.00) $ 0.02 $ 0.05 $ 0.05 $ 0.00 Shares used in computing non-GAAP net income (loss) per share - basic 476,972 308,786 420,456 308,680 474,797 Shares used in computing non-GAAP net income (loss) per share - diluted 476,972 310,129 425,996 318,949 478,367 Non-GAAP EBITDA Net income, non-GAAP $ (958) $ 7,150 $ 22,529 $17,368 $ 2,269 Depreciation expense 7,833 6,257 29,573 24,121 7,904 Amortization expense 179 314 917 1,256 178 Interest expense 1,314 1,753 6,108 6,489 1,350 Income tax expense (benefit) (142) 177 276 478 (432) ------ ------- -------- ------- -------------- Non-GAAP EBITDA $8,226 $15,651 $ 59,403 $49,712 $ 11,269 ====== ======= ======== ======= ============== *Adjusted to reflect adoption of new accounting principle.
