Science & Technology
Science and Technology
Science and Technology
Mon, December 7, 2009
Sun, December 6, 2009
Fri, December 4, 2009
Thu, December 3, 2009 Finisar Corporation Announces Second Quarter Financial Results
SUNNYVALE, CA--(Marketwire - December 3, 2009) - Finisar Corporation (
FINISAR FINANCIAL HIGHLIGHTS - SECOND QUARTER ENDED NOV. 1, 2009 Second Second First Quarter Quarter Quarter GAAP Results Ended Ended Ended Nov. 1, Nov. 2, August 2, 2009 2008 2009 ----------- ---------- ---------- (in thousands, except per share amounts) ----------- ---------- ---------- Continuing operations Total optics revenues $ 145,730 $ 147,746 $ 128,725 Gross margin 27.3% 27.0% 22.8% Before impairment- restructuring-retirement: Operating expenses $ 37,583 $ 51,329 $ 38,188 Operating income (loss) $ 2,210 $ (11,372) $ (8,786) Operating margin (deficit) 1.5% (7.7)% (6.8)% Impairment-restructuring $ (6,173) $ (178,768) $ - Loss on retirement of notes $ ( 25,067) $ (231) $ - Loss $ (31,417) $ (189,135) $ (11,116) Loss per share-basic and diluted $ (0.49) $ (3.55) $ (0.18) Basic and diluted shares 64,198 53,325 60,181 Discontinued operations Income (loss) $ (67) $ 1,115 $ 37,079 Income (loss) per share-basic $ 0.00 $ 0.02 $ 0.62 Income (loss) per share-diluted $ 0.00 $ 0.02 $ 0.59 Basic shares 64,198 53,325 60,181 Diluted shares 64,198 53,748 62,763 Second Second First Quarter Quarter Quarter Non-GAAP Results (a) Ended Ended Ended Nov. 1, Nov. 2, August 2, 2009 2008 2009 ----------- ---------- ---------- (in thousands, except per share amounts) Continuing operations Total optics revenues $ 145,730 $ 147,746 $ 128,725 Gross margin 29.6% 32.7% 28.8% Operating expenses $ 34,201 $ 37,374 $ 33,760 Operating Income $ 8,912 $ 10,980 $ 3,260 Operating margin 6.1% 7.4% 2.5% Income $ 7,544 $ 8,572 $ 1,765 Income per share-basic $ 0.12 $ 0 .16 $ 0.03 Income per share-diluted $ 0.11 $ 0 .16 $ 0.03 Basic shares 64,198 53,325 60,181 Diluted shares 65,655 53,778 61,076 Discontinued operations Income (loss) $ (67) $ 1,819 $ 733 Income (loss) per share-basic and diluted $ 0.00 $ 0.03 $ 0.01 Basic shares 64,198 53,325 60,181 Diluted shares 65,655 53,778 61,076 (a) In evaluating the operating performance of Finisar's business, Finisar management utilizes financial measures that exclude certain charges and credits required by U.S. 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 per GAAP include the following:
-- Total revenues from continuing operations increased to $145.7 million, up $17.0 million, or 13.2%, from $128.7 million in the preceding quarter and decreased $2.0 million, or 1.4%, from $147.7 million in the second quarter of the prior year, which also marked the first quarter in which the results of Optium were included following the completion of the merger on August 29, 2008; -- Of the $17.0 million increase in revenues from the preceding quarter, the sale of LAN/SAN products for applications less than 10 Gbps increased $6.9 million and the sale of ROADM products increased $4.5 million while revenues from 10 Gbps products increased $3.4 million; -- Of the $2.0 million decrease in revenues from the second quarter of the prior year, revenues from products for applications less than 10 Gbps decreased $11.7 million, partially offset by an increase in revenues from the sale of ROADM products of $6.7 million, an increase in revenues from CATV products of $1.7 million and an increase in revenues from 10/40 Gbps products of $1.3 million; -- Gross margin from continuing operations increased to 27.3% from 22.8% in the preceding quarter and 27.0% in the second quarter of the prior year; -- Operating income from continuing operations (before a charge for restructuring and the impairment of goodwill and minority investments) was $2.2 million, or 1.5% of revenues, compared to an operating loss of $8.8 million, or (6.8)% of revenues, in the preceding quarter and an operating loss of $11.4 million, or (7.7)% of revenues, in the second quarter of the prior year; -- Non-recurring charges totaling $6.2 million were recognized in the second quarter of which $4.2 million was related to a portion of the Company's facility in Allen, Texas that is no longer occupied following the transfer of certain production activities to the Company's facility in Ipoh, Malaysia; and $2.0 million was for the impairment of a minority investment; -- In August 2009, the Company retired $47.5 million principal amount of the Company's 2.5% convertible notes via an exchange offer for $24.9 million in cash and the issuance of 3.5 million shares of common stock. The total consideration paid in the exchange was less than the par value of the retired notes. However, because shares were used as part of the exchange consideration, pursuant to FAS 84 the Company was required to account for the retirement of the notes as if they had been converted according to their original terms in accordance with FAS 84, with that value compared to the total consideration paid in the exchange offer. As a result, the Company recorded a non-cash charge of $25.1 million related to the exchange offer, net of gains recorded on additional cash purchases totaling $57.7 million that retired an additional $59.4 million in aggregate principal amount of notes; -- Loss from continuing operations was $31.4 million, or $(0.49) per share, compared to a loss of $11.1 million, or $(0.18) per share, in the preceding quarter and a loss of $189.1 million, or $(3.55) per share, in the second quarter of the prior year, which included a charge for the impairment of goodwill totaling $178.8 million and $10.5 million for acquired research and development associated with the Optium merger; -- Loss net of taxes from discontinued operations was $67,000, or $0.00 per share, compared to net income of $37.1 million, or $0.59 per diluted share, in the preceding quarter, which included a gain recognized on the sale of the Company's Network Tools Division, and net income of $1.1 million, or $0.02 per diluted share, in the second quarter of the prior year; -- Cash and short-term investments, plus other long-term investments that can be readily converted into cash, totaled $80.7 million at the end of the second quarter compared to $60.4 million at the end of the prior quarter, reflecting net proceeds of $98.8 million from the sale of a new series 5.0% convertible notes partially offset by the use of $82.6 million of cash in connection with retiring $106.9 million aggregate principal amount of existing 2.5% convertible notes. Excluding these transactions, the Company's cash position increased by approximately $4.1 million during 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; and -- During the second quarter, the Company established a new secured credit facility with Wells Fargo Foothill, LLC, totaling $70.0 million under which $58.2 million was available to borrow at the end of the second quarter. No borrowings were outstanding at the end of the second quarter.
In addition to reporting financial results in accordance with U.S. 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 second quarter of fiscal 2010, these excluded items included, among other items described in Finisar Non-GAAP Financial Measures below, a non-recurring charge of $25.1 million related to the use of common stock as consideration in an exchange offer for the Company's 2.5% convertible notes partially offset by a non-recurring gain of $1.8 million resulting from the purchase of additional notes for cash at less than par value; a $4.2 million non-recurring charge related to the remaining lease payments associated with a portion of a facility that is no longer occupied; a $2.0 million non-cash charge for the impairment of a minority investment; a $0.8 million charge for slow moving and obsolete inventory; $3.9 million in non-cash stock-based compensation expense; $1.7 million in non-cash amortization charges related to acquired developed technology and purchased intangibles arising from previous acquisitions; and a $1.1 million non-cash charge for imputed interest expense on the Company's debt obligations.
Excluding these items:
-- Non-GAAP gross margin from continuing operations was 29.6% in the second quarter compared to 28.8% in the preceding quarter and 32.7% in the second quarter of the prior year. The sequential increase in non-GAAP gross margin reflects the impact of higher product shipment levels and the incremental contribution margin thereon, partially offset by lower production yields associated with a ramp in production volume for several high-speed products, while the decrease compared to the prior year reflects the impact of lower revenues and lower yields associated with manufacturing certain of our higher speed products; -- Non-GAAP operating expenses for continuing operations were $34.2 million in the second quarter, an increase of $0.4 million, or 1.3%, from the preceding quarter and a decrease of $3.2 million, or 8.5%, from the second quarter of the prior year; -- Non-GAAP operating income from continuing operations was $8.9 million, or 6.1% of revenues, in the second quarter, up $5.7 million from $3.3 million, or 2.5% of revenues, in the preceding quarter, and down $2.1 million from $11.0 million, or 7.4% of revenues, in the second quarter of the prior year. The increase in operating income from the previous quarter was due primarily to higher gross profit levels on higher revenues partially offset by slightly higher operating expenses. The decline from the prior year was primarily related to lower gross profit margins on similar levels of revenue partially offset by lower operating expenses; -- Non-GAAP net income from continuing operations was $7.5 million, or $0.12 per basic share and $0.11 per diluted share, compared to net income of $1.8 million, or $0.03 per basic and diluted share, in the preceding quarter and net income of $8.6 million, or $0.16 per basic and diluted share, in the second quarter of the prior year; -- Non-GAAP EBITDA from continuing operations rose to $16.0 million in the second quarter compared to $10.4 million in the preceding quarter and $18.2 million in the second quarter of the prior year; and -- Non-GAAP loss net of taxes from discontinued operations was $67,000, or $0.00 per share, compared to net income of $0.7 million, or $0.01 per basic and diluted share in the preceding quarter and net income of $1.8 million, or $0.03 per basic and diluted share, in the second quarter of the prior year.
"Incoming orders continued to be strong during the quarter, particularly for transceivers used in less than 10 Gbps LAN/SAN applications," said Jerry Rawls, Finisar's executive Chairman of the Board. "The other area of strength was in ROADMs for telecom WDM networks. And our backlog position suggests that we can look forward to another sequential increase in revenues next quarter led by a surge in demand for 10 Gbps products."
"We continue to work on the transfer of additional production activities to our off-shore locations," said Eitan Gertel, Finisar's Chief Executive Officer. "It appears that this work will largely be completed by the end of the fiscal year as we also work in the interim at those facilities to ramp several new products. We expect continued improvements in our profitability in the meantime in conjunction with a rising top line."
OUTLOOK
The Company indicated that it currently expects revenues for its third fiscal quarter ending January 31, 2010 will likely range from $148 to $158 million. On a GAAP basis, gross margins are expected to range from 27% to 29% with operating margins ranging from 1% to 3%. Additional non-recurring or non-cash charges excluded from non-GAAP results in calculating operating income are expected to total approximately $7 to $8 million. As a result, on a non-GAAP basis, gross margins are expected to range from 30% to 32% with non-GAAP operating margins ranging from 6% to 8%.
CONFERENCE CALL
Finisar will discuss its financial results for the second quarter and its current business outlook during its regular quarterly conference call scheduled for today, December 3, 2009, at 2:00 p.m. PST/5:00 EST. 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 706-643-4465 (international) and enter conference ID 40828137.
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 40828137 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. Further information regarding these and other risks relating to Finisar's business is set forth in Finisar's annual report on Form 10-K (filed July 9, 2009) and quarterly SEC filings.
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 Six Months Ended Ended -------------------- -------------------- --------- November November November November August 1, 2009 2, 2008 1, 2009 2, 2008 2, 2009 --------- --------- --------- --------- --------- (Unaudited) (in thousands, except per share data) Revenues $ 145,730 $ 147,746 $ 274,455 $ 263,520 $ 128,725 Cost of revenues 104,745 106,536 202,875 180,671 98,130 Amortization of acquired developed technology 1,192 1,253 2,385 2,103 1,193 --------- --------- --------- --------- --------- Gross profit 39,793 39,957 69,195 80,746 29,402 Gross margin 27.3% 27.0% 25.2% 30.6% 22.8% Operating expenses: Research and development 21,575 21,774 42,622 39,187 21,047 Sales and marketing 7,313 7,903 14,132 14,779 6,819 General and administrative 8,177 10,538 17,798 19,049 9,621 Acquired in-process research and development - 10,500 - 10,500 - Amortization of purchased intangibles 518 614 1,219 743 701 Impairment of goodwill and intangible assets - 178,768 - 178,768 - Restructuring costs 4,173 - 4,173 - - --------- --------- --------- --------- --------- Total operating expenses 41,756 230,097 79,944 263,026 38,188 --------- --------- --------- --------- --------- Loss from operations (1,963) (190,140) (10,749) (182,280) (8,786) Interest income 9 657 19 1,625 10 Interest expense (2,167) (4,113) (4,601) (9,356) (2,434) Loss on repayment/purchase of convertible notes (25,067) (231) (25,067) (231) - Other income (expense), net (2,191) (3,051) (1,938) (2,948) 253 --------- --------- --------- --------- --------- Loss from continuing operations before income taxes (31,379) (196,878) (42,336) (193,190) (10,957) Provision for (benefit from) income taxes 38 (7,743) 197 (6,997) 159 --------- --------- --------- --------- --------- Loss from continuing operations (31,417) (189,135) (42,533) (186,193) (11,116) Income (loss) from discontinued operations, net of taxes (67) 1,115 37,012 990 37,079 --------- --------- --------- --------- --------- Net income/(loss) $ (31,484) $(188,020) $ (5,521) $(185,203) $ 25,963 ========= ========= ========= ========= ========= Loss per share from continuing operations - basic $ (0.49) $ (3.55) $ (0.68) $ (4.06) $ (0.18) Income (loss) per share from discontinued operations - basic $ (0.00) $ 0.02 $ 0.60 $ 0.02 $ 0.62 Income (loss) per share from discontinued operations - diluted $ (0.00) $ 0.02 $ 0.60 $ 0.02 $ 0.59 Shares used in computing net loss per share from continuing operations - basic and diluted 64,198 53,325 62,157 45,889 60,181 Shares used in computing net income (loss) per share from discontinued operations - basic 64,198 53,325 62,157 45,889 60,181 Shares used in computing net income (loss) per share from discontinued operations - diluted 64,198 53,325 62,157 45,889 62,763 Finisar Corporation Consolidated Balance Sheets (In thousands) November 1, August 2, April 30, 2009 2009 2009 ---------- ---------- ---------- (unaudited) (unaudited) ASSETS Current assets: Cash and cash equivalents $ 80,595 $ 60,327 $ 37,129 Short-term available-for-sale investments 79 92 92 Accounts receivable, net 95,924 99,466 81,820 Accounts receivable, other 9,747 8,512 10,033 Inventories 113,133 108,686 107,764 Prepaid expenses 6,738 5,568 6,795 Current assets associated with discontinued operations - - 4,863 ---------- ---------- ---------- Total current assets 306,216 282,651 248,496 Property, plant and improvements, net 81,077 79,492 81,606 Purchased technology, net 14,074 15,267 16,459 Other intangible assets, net 12,559 13,102 13,427 Minority investments 12,289 14,289 14,289 Other assets 6,183 2,427 2,584 Non-current assets associated with discontinued operations - - 3,527 ---------- ---------- ---------- Total assets $ 432,398 $ 407,228 $ 380,388 ========== ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 54,915 $ 52,264 $ 48,421 Accrued compensation 10,885 9,048 11,428 Other accrued liabilities 25,403 25,102 30,513 Deferred revenue 2,079 2,073 1,703 Current portion of Convertible notes 33,334 - - Current portion of long-term debt 6,241 6,173 6,107 Non-cancelable purchase obligations 596 657 2,965 Current liabilities associated with discontinued operations - - 3,160 ---------- ---------- ---------- Total current liabilities 133,453 95,317 104,297 Long-term liabilities: Convertible notes 100,000 135,490 134,255 Long-term debt 12,151 13,737 15,305 Other long-term liabilities 5,832 2,352 2,511 Deferred income taxes 1,136 973 1,149 Non-current liabilities associated with discontinued operations - - 650 ---------- ---------- ---------- Total long-term liabilities 119,119 152,552 153,870 Stockholders' equity: Common stock 65 61 60 Additional paid-in capital 1,887,167 1,838,508 1,831,224 Accumulated other comprehensive income 9,840 6,552 2,662 Accumulated deficit (1,717,246) (1,685,762) (1,711,725) ---------- ---------- ---------- Total stockholders' equity 179,826 159,359 122,221 ---------- ---------- ---------- Total liabilities and stockholders' equity $ 432,398 $ 407,228 $ 380,388 ========== ========== ==========
FINISAR NON-GAAP FINANCIAL MEASURES
In addition to reporting financial results in accordance with U.S. 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); -- Gain or loss on settlement of lawsuits (non-recurring); -- Acquired in-process research and development expense (non-recurring and non-cash charges); -- Amortization of purchased intangibles (non-cash charges related to prior acquisitions); -- Restructuring charges associated with the abandonment of certain facilities (non-recurring); and -- Impairment charges associated with intangible assets (non-cash and non- recurring).
In calculating non-GAAP net income from continuing operations and non-GAAP net income from continuing operations per share, we have also excluded the following items in applicable periods:
-- Amortization of discount on convertible debt and imputed interest expense (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 losses (non-recurring and non-cash charges); -- Tax charges arising from timing difference related to asset purchases (non-cash provision); and -- Cumulative effect of a change in accounting principle (non-recurring and non-cash charges or income).
In calculating non-GAAP income (loss) from discontinued operations and non-GAAP net income (loss) from discontinued operations per share, we have also excluded gains on disposal of a product line and disposal of discontinued operations.
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 Three Months Ended Six Months Ended Ended ------------------- ------------------- -------- November November November November August 1, 2009 2, 2008 1, 2009 2, 2008 2, 2009 -------- --------- -------- --------- -------- (Unaudited) (in thousands, except per share data) Reconciliation of GAAP income (loss) to non-GAAP income (loss) from continuing operations Reconciliation of GAAP Gross Profit to non-GAAP Gross Profit: Gross profit per GAAP $ 39,793 $ 39,957 $ 69,195 $ 80,746 $ 29,402 Gross margin, GAAP 27.3% 27.0% 25.2% 30.6% 22.8% Adjustments: Cost of revenues Change in excess and obsolete inventory reserve 805 4,785 6,059 4,500 5,254 Amortization of acquired technology 1,192 1,253 2,384 2,103 1,192 Duplicate facility costs during facility move - 117 - 287 - Stock compensation 1,288 840 2,319 1,661 1,031 Purchase accounting adjustment for sale of acquired inventory - 1,402 - 1,402 - Reduction in force costs 35 - 176 36 141 -------- --------- -------- --------- -------- Total cost of revenue adjustments 3,320 8,397 10,938 9,989 7,618 Gross profit, non-GAAP 43,113 48,354 80,133 90,735 37,020 Gross margin, non-GAAP 29.6% 32.7% 29.2% 34.4% 28.8% Reconciliation of GAAP operating income (loss) to non-GAAP operating income (loss): Operating loss per GAAP (1,963) (190,140) (10,749) (182,280) (8,786) Operating margin, GAAP -1.3% -128.7% -3.9% -69.2% -6.8% Adjustments: Total cost of revenue adjustments 3,320 8,397 10,938 9,989 7,618 Research and development Reduction in force costs - 76 29 76 29 Stock compensation 1,490 1,509 3,015 2,369 1,525 Sales and marketing Stock compensation 431 440 1,009 767 578 General and administrative Reduction in force costs 200 - 249 - 49 Stock compensation 726 686 1,762 1,201 1,036 Payroll taxes related to options investigation 17 - 200 - 183 Costs related to options investigation - 130 - 276 - IPO Laddering Settlement - - 327 - 327 Amortization of purchased intangibles 518 614 1,219 742 701 Acquired in-process R&D - 10,500 - 10,500 - Restructuring costs 4,173 - 4,173 - - Impairment of intangible assets - 178,768 - 178,768 - -------- --------- -------- --------- -------- Total cost of revenue and operating expense adjustments 10,875 201,120 22,921 204,688 12,046 Operating income, non-GAAP 8,912 10,980 12,172 22,408 3,260 Operating margin, non-GAAP 6.1% 7.4% 4.4% 8.5% 2.5% Reconciliation of GAAP income (loss) to non-GAAP income (loss) from continuing operations: Loss per GAAP from continuing operations before cumulative effect of change in accounting principle (31,417) (189,135) (42,533) (186,193) (11,116) Total cost of revenue and operating expense adjustments 10,875 201,120 22,921 204,688 12,046 Amortization of discount on convertible debt - 671 - 1,817 - No cash imputed interest expenses on convertible debt 1,056 1,235 2,291 2,470 1,235 Loss on repayment/purchase of convertible notes 25,067 231 25,067 231 - Other income (expense), net Loss (gain) on sale of assets 254 (20) 275 393 21 Loss on minority investments 2,000 1,197 1,625 797 (375) Other misc income - (58) (2) (558) (2) Foreign exchange transaction loss/ (gain) (291) 1,729 (335) 1,729 (44) Provision for income tax - - Timing difference related to asset purchases - (8,398) - (7,847) - -------- --------- -------- --------- -------- Total adjustments 38,961 197,707 51,842 203,720 12,881 -------- --------- -------- --------- -------- Income, non-GAAP, from continuing operations 7,544 8,572 9,309 17,527 1,765 -------- --------- -------- --------- -------- Reconciliation of GAAP income (loss) to non-GAAP income (loss) from discontinued operations: Income (loss) per GAAP from discontinued operations (67) 1,115 37,012 990 37,079 Adjustments: Reduction in force costs - 19 6 119 6 Stock compensation - 296 704 831 704 Amortization of acquired technology - 250 170 646 170 Amortization of purchased intangibles - 139 77 278 77 Gain (loss) on disposal of a product line - - (1,250) 919 (1,250) Gain on disposal of discontinued operations - - (36,053) - (36,053) -------- --------- -------- --------- -------- Total adjustments - 704 (36,346) 2,793 (36,346) -------- --------- -------- --------- -------- Income (loss) from discontinued operations, non-GAAP (67) 1,819 666 3,783 733 -------- --------- -------- --------- -------- Reconciliation of GAAP net income (loss) to non-GAAP net income (loss): Net loss per GAAP (31,484) (188,020) (5,521) (185,203) 25,963 Total adjustments from continuing operations 38,961 197,707 51,842 203,720 12,881 Total adjustments from discontinuing operations - 704 (36,346) 2,793 (36,346) Cumulative Effect Cumulative effect of change in accounting principle - - - - - -------- --------- -------- --------- -------- Total adjustments 38,961 198,411 15,496 206,513 (23,465) -------- --------- -------- --------- -------- Net income, non-GAAP $ 7,477 $ 10,391 $ 9,975 $ 21,310 $ 2,498 ======== ========= ======== ========= ======== Income per share from continuing operations - basic $ 0.12 $ 0.16 $ 0.15 $ 0.38 $ 0.03 Income per share from continuing operations - diluted $ 0.11 $ 0.16 $ 0.15 $ 0.38 $ 0.03 Income (loss) per share from discontinued operations - basic $ (0.00) $ 0.03 $ 0.01 $ 0.08 $ 0.01 Income (loss) per share from discontinued operations - diluted $ (0.00) $ 0.03 $ 0.01 $ 0.08 $ 0.01 Shares used in computing net income per share - basic 64,198 53,325 62,157 45,889 60,181 Shares used in computing net income per share - diluted 65,655 53,778 63,442 46,225 61,076 Continuing operations Net income, non-GAAP $ 7,544 $ 8,572 $ 9,309 $ 17,527 $ 1,765 Depreciation expense 7,182 7,245 14,354 13,413 7,171 Amortization 181 212 308 468 127 Interest expense 1,102 1,550 2,291 3,444 1,189 Income tax expense 38 655 197 850 159 -------- --------- -------- --------- -------- Non-GAAP EBITDA $ 16,047 $ 18,234 $ 26,459 $ 35,702 $ 10,411 -------- --------- -------- --------- -------- Discontinued operations Net income (loss), non-GAAP (67) 1,819 666 3,783 733 Depreciation expense - 200 119 423 119 -------- --------- -------- --------- -------- Non-GAAP EBITDA $ (67) $ 2,019 $ 785 $ 4,206 $ 852 -------- --------- -------- --------- -------- -------- --------- -------- --------- -------- Total Non-GAAP EBITDA $ 15,980 $ 20,253 $ 27,244 $ 39,908 $ 11,263 ======== ========= ======== ========= ========
