A non-GAAP financial measure is a numerical measure of a company's performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. Non-GAAP measures are not in accordance with, nor are they a substitute for, GAAP measures. Other companies may use different non-GAAP measures and presentation of results.
We provide non-GAAP measures of non-GAAP income (loss) from operations and non-GAAP net income (loss) as a supplement to financial results based on GAAP income (loss) from operations and GAAP net income (loss). The Company believes that the additional non-GAAP measures are useful to investors for the purpose of financial analysis. We believe the presentation of non-GAAP measures provides investors with additional insight into underlying operating results and prospects for the future by excluding gains, losses and other charges that are considered by management to be outside of the Company's core operating results. Management uses these measures internally to evaluate the Company's in-period operating performance before taking into account these non-operating gains, losses and charges. In addition, the measures are used for planning and forecasting of the Company's performance in future periods.
In deriving non-GAAP income (loss) from operations from GAAP income (loss) from operations, we exclude stock-based compensation charges, amortization of intangible assets, as well as restructuring and impairment charges. In deriving non-GAAP net income (loss) from GAAP net income (loss), we further exclude gain or loss on the embedded derivative. Stock-based compensation charges, amortization of intangible assets, and gain or loss on the embedded derivative represent charges that recur in amounts unrelated to the Company's operations. Restructuring and impairment costs relate to strategic initiatives that result in short term increases in costs that end with the fulfillment of the initiative and cost reductions in future periods.
The non-GAAP financial measures we provide have certain limitations because they do not reflect all of the costs associated with the operation of our business as determined in accordance with GAAP. Non-GAAP income (loss) from operations and Non-GAAP net income (loss) are in addition to, and are not a substitute for or superior to, income (loss) from operations and net income (loss), which are prepared in accordance with GAAP and may be different from non-GAAP measures used by other companies. A detailed reconciliation of the non-GAAP measures to the most directly comparable GAAP measure is set forth below. Investors are encouraged to review these reconciliations to appropriately incorporate the non-GAAP measures and the limitations of these measures into their analyses. For complete information on stock-based compensation, amortization of intangible assets, restructuring and impairment charges, and the change in the fair value of our embedded derivatives, please see our Form 10-K for the year ended September 30, 2013.
VITESSE SEMICONDUCTOR CORPORATION
UNAUDITED CONSOLIDATED BALANCE SHEETS
September 30,
2013 2012
------------ ------------
(in thousands, except par
value)
ASSETS
Current assets:
Cash $ 68,863 $ 23,891
Accounts receivable, net 9,807 9,403
Inventory, net 10,692 12,060
Prepaid expenses and other current assets 1,897 2,125
------------ ------------
Total current assets 91,259 47,479
Property, plant and equipment, net 3,107 3,832
Other intangible assets, net 1,170 1,175
Other assets 3,425 4,130
------------ ------------
$ 98,961 $ 56,616
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 7,436 $ 5,726
Accrued expenses and other current liabilities 12,245 12,188
Deferred revenue 2,215 871
------------ ------------
Total current liabilities 21,896 18,785
Other long-term liabilities 407 574
Long-term debt, net 16,366 15,852
Compound embedded derivative - 2,899
Convertible subordinated debt, net 44,384 42,521
------------ ------------
Total liabilities 83,053 80,631
------------ ------------
Stockholders' equity (deficit):
Preferred stock, $0.01 par value: 10,000
shares authorized; Series B Non Cumulative,
Convertible, nil and 135 shares outstanding
at September 30, 2013 and 2012, respectively - 1
Common stock, $0.01 par value: 250,000 shares
authorized; 57,545 and 25,812 shares
outstanding at September 30, 2013 and 2012,
respectively 575 258
Additional paid-in-capital 1,891,661 1,829,976
Accumulated deficit (1,876,328) (1,854,250)
------------ ------------
Total stockholders' equity (deficit) 15,908 (24,015)
------------ ------------
$ 98,961 $ 56,616
============ ============
VITESSE SEMICONDUCTOR CORPORATION
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Year Ended
September 30, September 30,
-------------------- --------------------
2013 2012 2013 2012
--------- --------- --------- ---------
(in thousands, except per share data)
Net revenues:
Product revenues $ 26,455 $ 28,053 $ 101,334 $ 109,920
Intellectual property revenues 420 1,415 2,439 9,563
--------- --------- --------- ---------
Net revenues 26,875 29,468 103,773 119,483
--------- --------- --------- ---------
Costs and expenses:
Cost of product revenues 12,753 12,379 46,763 46,407
Engineering, research and
development 9,940 10,195 41,927 42,713
Selling, general and
administrative 7,593 7,727 30,210 29,822
Restructuring and impairment - (1,460) - (1,424)
Amortization of intangible
assets 81 96 347 330
--------- --------- --------- ---------
Costs and expenses 30,367 28,937 119,247 117,848
--------- --------- --------- ---------
(Loss) income from operations (3,492) 531 (15,474) 1,635
Other expense (income) :
Interest expense, net 1,997 1,956 7,916 7,778
Gain on compound embedded
derivative - (1,124) (803) (4,897)
Other expense (income), net 34 19 39 40
--------- --------- --------- ---------
Other expense, net 2,031 851 7,152 2,921
--------- --------- --------- ---------
Loss before income tax benefit (5,523) (320) (22,626) (1,286)
Income tax benefit 242 (1,537) (548) (174)
--------- --------- --------- ---------
Net (loss) income $ (5,765) $ 1,217 $ (22,078) $ (1,112)
========= ========= ========= =========
Net (loss) income per common
share -- basic $ (0.10) $ 0.05 $ (0.55) $ (0.04)
Net (loss) income per common
share - diluted $ (0.10) $ 0.05 $ (0.55) $ (0.04)
Weighted average shares
outstanding- basic 57,254 25,628 40,311 25,121
Weighted average shares
outstanding- diluted 57,254 26,513 40,311 25,121
VITESSE SEMICONDUCTOR CORPORATION
UNAUDITED RECONCILIATION OF GAAP NET (LOSS) INCOME TO NON-GAAP NET LOSS
Three Months Ended
September 30, September 30,
-------------------- --------------------
2013 2012 2013 2012
--------- --------- --------- ---------
(in thousands, except per share data)
GAAP net (loss) income $ (5,765) $ 1,217 $ (22,078) $ (1,112)
--------- --------- --------- ---------
Adjustments:
Stock-based compensation charges 1,091 1,141 4,396 4,442
Amortization of intangible
assets 81 96 347 330
Restructuring and impairment
charges - (1,460) - (1,424)
Gain on compound embedded
derivative - (1,124) (803) (4,897)
--------- --------- --------- ---------
Total GAAP to non-GAAP
adjustments 1,172 (1,347) 3,940 (1,549)
--------- --------- --------- ---------
Non-GAAP net (loss) income $ (4,593) $ (130) $ (18,138) $ (2,661)
========= ========= ========= =========
Net (loss) income per common
share
Basic:
GAAP net (loss) income $ (0.10) $ 0.05 $ (0.55) $ (0.04)
Adjustments 0.02 (0.05) 0.10 (0.06)
--------- --------- --------- ---------
Non-GAAP net (loss) income $ (0.08) $ - $ (0.45) $ (0.10)
========= ========= ========= =========
Net (loss) income per common
share
Diluted:
GAAP net (loss) income $ (0.10) $ 0.05 $ (0.55) $ (0.04)
Adjustments 0.02 (0.05) 0.10 (0.06)
--------- --------- --------- ---------
Non-GAAP net (loss) income $ (0.08) $ - $ (0.45) $ (0.10)
========= ========= ========= =========
UNAUDITED RECONCILIATION OF GAAP (LOSS) INCOME FROM OPERATIONS
TO NON-GAAP (LOSS) INCOME FROM OPERATIONS
GAAP (loss) income from
operations $ (3,492) $ 531 $ (15,474) $ 1,635
--------- --------- --------- ---------
Adjustments:
Stock-based compensation charges 1,091 1,141 4,396 4,442
Amortization of intangible
assets 81 96 347 330
Restructuring and impairment
charges - (1,460) - (1,424)
--------- --------- --------- ---------
Total GAAP to non-GAAP
adjustments 1,172 (223) 4,743 3,348
--------- --------- --------- ---------
Non-GAAP (loss) income from
operations $ (2,320) $ 308 $ (10,731) $ 4,983
========= ========= ========= =========
