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Pulse Electronics Corporation Reports Second Quarter Results

Based on discussions with investors and equity analysts, we believe that a reader’s understanding of the company’s operating performance is enhanced by references to these non-GAAP measures. Removing charges for severance, impairment and other associated costs, non-cash stock-based compensation expenses and other adjustments may facilitate comparisons of operating performance among financial periods and peer companies. These charges result from facility closures, the exit of a product line, production relocations and capacity reductions and / or restructuring of overhead and operating expenses to enhance or maintain profitability in an increasingly competitive environment. Removing non-cash stock-based compensation expenses facilitates comparisons of the company’s operating performance with that of other companies with differing compensation structures and with the company’s performance in periods during which its own compensation structure may have been different. Impairment charges, accelerated depreciation and costs related to an unsolicited takeover attempt are not part of the normal operating expense structure of the relevant business in the period in which the charge is recorded.

Copyright © 2012 Pulse Electronics Corporation. All rights reserved. All brand names and trademarks are properties of their respective holders.

 
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per-share data)
  Three Months Ended   Six Months Ended

6/29/12

 

7/1/11

6/29/12

 

7/1/11

 
Net sales $ 100,383 $ 94,758 $ 194,518 $ 182,797
Cost of sales   81,179     72,385     156,916     142,000  
Gross profit 19,204 22,373 37,602 40,797
Operating expenses 18,792 21,255 37,785 42,796
Severance, impairment and other associated costs 515 3,867 2,052 10,623
Costs related to unsolicited takeover attempt   -     1,486     -     1,916  
Operating loss (103 ) (4,235 ) (2,235 ) (14,538 )
 
Interest expense, net (3,752 ) (1,158 ) (6,345 ) (2,451 )
Other (expense) income, net   (1,148 )   167     (69 )   1,709  
Loss from continuing operations before income taxes (5,003 ) (5,226 ) (8,649 ) (15,280 )
Income tax (expense) benefit   (1,491 )   765     (2,148 )   5,830  
Net loss from continuing operations (6,494 ) (4,461 ) (10,797 ) (9,450 )
Net earnings from discontinued operations   -     -     -     612  
Net loss (6,494 ) (4,461 ) (10,797 ) (8,838 )
Less: Net (loss) earnings attributable to non-controlling interest   (97 )   44     (294 )   92  
Net loss attributable to Pulse Electronics Corporation (6,397 ) (4,505 ) (10,503 ) (8,930 )
 
Basic shares outstanding 41,686 41,153 41,554 41,186
Basic loss per share from continuing operations (0.15 ) (0.11 ) (0.25 ) (0.23 )
Basic earnings per share from discontinued operations   -     -     -     0.01  
Basic loss per share (0.15 ) (0.11 ) (0.25 ) (0.22 )
 
Diluted shares outstanding 41,686 41,153 41,554 41,186
Diluted loss per share from continuing operations (0.15 ) (0.11 ) (0.25 ) (0.23 )
Diluted earnings per share from discontinued operations   -     -     -     0.01  
Diluted loss per share (0.15 ) (0.11 ) (0.25 ) (0.22 )
 
AMOUNTS ATTRIBUTABLE TO PULSE ELECTRONICS CORPORATION:
 
Net loss from continuing operations excluding non-controlling interest $ (6,397 ) $ (4,505 ) $ (10,503 ) $ (9,542 )
Net earnings from discontinued operations   -     -     -     612  
Net loss attributable to Pulse Electronics Corporation (6,397 ) (4,505 ) (10,503 ) (8,930 )
 
 
BUSINESS SEGMENT INFORMATION (UNAUDITED)
(in thousands)
  Three Months Ended   Six Months Ended

6/29/2012

 

7/1/2011

6/29/2012

 

7/1/2011

Net Sales
Network 41,699 43,391 80,453 85,935
Power 32,121 38,668 63,811 70,567
Wireless   26,563     12,699   50,254   26,295  
Total net sales 100,383 94,758 194,518 182,797
 
Operating profit (loss)
Network 767 1,278 (106 ) 1,687
Power 2,045 3,399 4,377 3,927
Wireless   (2,400 )   (3,559 ) (4,454 ) (7,613 )

Operating profit (loss) excluding severance, impairment and other associated costs, and costs related to unsolicited takeover attempt

412 1,118 (183 ) (1,999 )
Severance, impairment and other associated costs 515 3,867 2,052 10,623
Costs related to unsolicited takeover attempt   -     1,486   -   1,916  
Operating loss (103 ) (4,235 ) (2,235 ) (14,538 )
 
FINANCIAL POSITION (UNAUDITED)
(in thousands)

6/29/2012

12/30/2011

 
Cash and cash equivalents $ 19,767 $ 17,606
Accounts receivable, net 71,371 59,507
Inventory, net 32,597 36,968
Prepaid expenses and other current assets 22,432 19,842
Net property, plant and equipment 30,675 28,605
Other assets   9,997     10,909  
Total assets 186,839 173,437
 
 
Accounts payable 66,663 52,802
Accrued expenses and other current liabilities 41,397 42,855
Current portion of long-term debt 54,950 -
Long-term debt 50,000 93,950
Other long-term liabilities   19,123     21,650  
Total liabilities 232,133 211,257
Total deficit   (45,294 )   (37,820 )
 
Total liabilities and deficit 186,839 173,437
 
Shares outstanding 42,286 41,980
 
 

Schedule A

NON-GAAP MEASURES (UNAUDITED)

(in thousands, except per-share amounts)

 
1. Adjusted EBITDA
       

Quarter Ended

6/29/12

7/1/11

 
Net loss attributable to Pulse Electronics Corporation $ (6,397 ) $ (4,505 )
Non-controlling interest (97 ) 44
Income tax expense (benefit) 1,491 (765 )
Interest expense, net 3,752 1,158
Non-cash stock-based compensation expenses 433 399
Depreciation and amortization 1,942 2,579
Other expense (income) 1,148 (167 )
Severance, impairment and other associated costs 515 3,867
Costs related to unsolicited takeover attempt   -     1,486  
Adjusted EBITDA 2,787 4,096
 
 
2. Net (loss) earnings per diluted share from continuing operations excluding severance, impairment and other associated costs, costs related to unsolicited takeover attempt, non-cash stock-based compensation expenses and other adjustments
 

Quarter Ended

Six Months Ended

6/29/12

7/1/11

6/29/12

7/1/11

 
Net loss per diluted share $ (0.15 ) $ (0.11 ) $ (0.25 ) $

(0.23

)
Diluted earnings per share from discontinued operations - - - 0.01
After-tax severance, impairment and other associated costs, per share 0.01 0.07 0.04 0.19
After-tax non-cash stock-based compensation expenses, per share 0.01 0.01 0.01 0.01
After-tax costs related to unsolicited takeover attempt, per share   -     0.02     -     0.03  
Net (loss) earnings per diluted share from continuing operations excluding severance, impairment and other associated costs, non-cash stock-based compensation expenses and other adjustments (0.13 ) (0.01 ) (0.20 )

0.01

 
3. Operating profit (loss) excluding severance, impairment and other associated costs, costs related to unsolicited takeover attempt, non-cash stock-based compensation expenses and other adjustments
 

Quarter Ended

Six Months Ended

6/29/12

7/1/11

6/29/12

7/1/11

 
Operating loss $ (103 ) $ (4,235 ) $ (2,235 ) $ (14,538 )
Pre-tax severance, impairment and other associated costs 515 3,867 2,052 10,623
Pre-tax non-cash stock-based compensation expenses 433 399 840 647
Pre-tax costs related to unsolicited takeover attempt   -     1,486     -     1,916  

Operating profit (loss) excluding severance, impairment and other associated costs, non-cash stock-based compensation expenses and other adjustments

845 1,517 657 (1,352 )
 




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