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 and loss on extinguishment of debt. Stock-based compensation charges, amortization of intangible assets, gain or loss on the embedded derivative and loss on extinguishment of debt 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, 2012.
VITESSE SEMICONDUCTOR CORPORATION
UNAUDITED CONSOLIDATED BALANCE SHEETS
June 31, September 30,
2013 2012
------------- -------------
(in thousands, except par
value)
ASSETS
Current assets:
Cash $ 71,335 $ 23,891
Accounts receivable, net 10,404 9,403
Inventory, net 11,881 12,060
Prepaid expenses and other current assets 3,193 2,125
------------- -------------
Total current assets 96,813 47,479
Property, plant and equipment, net 2,793 3,832
Other intangible assets, net 1,251 1,175
Other assets 3,700 4,130
------------- -------------
$ 104,557 $ 56,616
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 8,365 $ 5,726
Accrued expenses and other current
liabilities 13,111 12,188
Current portion of debt, net 7,967 -
Deferred revenue 2,758 871
------------- -------------
Total current liabilities 32,201 18,785
Other long-term liabilities 410 574
Long-term debt, net 8,259 15,852
Compound embedded derivative - 2,899
Convertible subordinated debt, net 43,907 42,521
------------- -------------
Total liabilities 84,777 80,631
------------- -------------
Stockholders' equity (deficit):
Preferred stock, $0.01 par value: 10,000
shares authorized; Series B Non Cumulative,
Convertible, 135 shares outstanding at June
30, 2013 and September 30, 2012,
respectively 1 1
Common stock, $0.01 par value: 250,000
shares authorized; 56,406 and 25,812 shares
outstanding at June 30, 2013 and September
30, 2012, respectively 564 258
Additional paid-in-capital 1,889,778 1,829,976
Accumulated deficit (1,870,563) (1,854,250)
------------- -------------
Total stockholders' equity (deficit) 19,780 (24,015)
------------- -------------
$ 104,557 $ 56,616
============= =============
VITESSE SEMICONDUCTOR CORPORATION
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Nine Months Ended
June 30, June 30,
-------------------- --------------------
2013 2012 2013 2012
--------- --------- --------- ---------
(in thousands, except per share data)
Net revenues:
Product revenues $ 26,285 $ 25,730 $ 74,879 $ 81,867
Intellectual property revenues 133 4,557 2,019 8,148
--------- --------- --------- ---------
Net revenues 26,418 30,287 76,898 90,015
--------- --------- --------- ---------
Costs and expenses:
Cost of product revenues 11,666 11,270 34,010 34,028
Engineering, research and
development 11,706 10,513 31,987 32,518
Selling, general and
administrative 7,257 6,296 22,617 22,131
Amortization of intangible
assets 80 88 266 234
--------- --------- --------- ---------
Costs and expenses 30,709 28,167 88,880 88,911
--------- --------- --------- ---------
(Loss) income from operations (4,291) 2,120 (11,982) 1,104
Other expense (income):
Interest expense, net 1,983 1,950 5,919 5,823
Gain on compound embedded
derivative - (5,755) (803) (3,773)
Other expense (income), net 31 (20) 5 21
--------- --------- --------- ---------
Other expense (income), net 2,014 (3,825) 5,121 2,071
--------- --------- --------- ---------
(Loss) income before income tax
expense (benefit) (6,305) 5,945 (17,103) (967)
Income tax expense (benefit) 129 1,234 (790) 1,363
--------- --------- --------- ---------
Net (loss) income $ (6,434) $ 4,711 $ (16,313) $ (2,330)
========= ========= ========= =========
Net (loss) income per common
share -- basic $ (0.17) $ 0.18 $ (0.47) $ (0.09)
Net (loss) income per common
share - diluted $ (0.17) $ 0.16 $ (0.47) $ (0.09)
Weighted average shares
outstanding- basic 38,630 25,302 34,601 24,951
Weighted average shares
outstanding- diluted 38,630 38,413 34,601 24,951
VITESSE SEMICONDUCTOR CORPORATION
UNAUDITED RECONCILIATION OF GAAP NET (LOSS) INCOME TO NON-GAAP NET LOSS
Three Months Ended Nine Months Ended
June 30, June 30,
-------------------- --------------------
2013 2012 2013 2012
--------- --------- --------- ---------
(in thousands, except per share data)
GAAP net (loss) income $ (6,434) $ 4,711 $ (16,313) $ (2,330)
--------- --------- --------- ---------
Adjustments:
Stock-based compensation charges 1,156 1,092 3,305 3,301
Amortization of intangible
assets 80 88 266 234
Restructuring and impairment
charges - 4 53 36
Gain on compound embedded
derivative - (5,755) (803) (3,773)
--------- --------- --------- ---------
Total GAAP to non-GAAP
adjustments 1,236 (4,571) 2,821 (202)
--------- --------- --------- ---------
Non-GAAP net (loss) income $ (5,198) $ 140 $ (13,492) $ (2,532)
========= ========= ========= =========
Net (loss) income per common
share
Basic:
GAAP net (loss) income $ (0.17) $ 0.18 $ (0.47) $ (0.09)
Adjustments * 0.04 (0.18) 0.08 (0.01)
--------- --------- --------- ---------
Non-GAAP net (loss) income $ (0.13) $ - $ (0.39) $ (0.10)
========= ========= ========= =========
Net (loss) income per common
share
Diluted:
GAAP net (loss) income $ (0.17) $ 0.16 $ (0.47) $ (0.09)
Adjustments * 0.04 (0.16) 0.08 (0.01)
--------- --------- --------- ---------
Non-GAAP net (loss) income $ (0.13) $ - $ (0.39) $ (0.10)
========= ========= ========= =========
UNAUDITED RECONCILIATION OF GAAP (LOSS) INCOME FROM OPERATIONSTO NON-GAAP
(LOSS) INCOME FROM OPERATIONS
GAAP (loss) income from
operations $ (4,291) $ 2,120 $ (11,982) $ 1,104
--------- --------- --------- ---------
Adjustments:
Stock-based compensation charges 1,156 1,092 3,305 3,301
Amortization of intangible
assets 80 88 266 234
Restructuring and impairment
charges - 4 53 36
--------- --------- --------- ---------
Total GAAP to non-GAAP
adjustments 1,236 1,184 3,624 3,571
--------- --------- --------- ---------
Non-GAAP (loss) income from
operations $ (3,055) $ 3,304 $ (8,358) $ 4,675
========= ========= ========= =========
* Included in the adjustments are calculations required by the two class
method relative to participation rights of our preferred shares.
