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NeoPhotonics Reports Fourth Quarter And Year End 2012 Financial Results

Stocks in this article: NPTN

Use of Non-GAAP Financial Information

The company provides Non-GAAP gross margin, Non-GAAP net income (loss) from continuing operations, Non-GAAP diluted net income (loss) per share and adjusted EBITDA, as supplemental information. In computing certain of these Non-GAAP financial measures, the company excludes certain items included under GAAP, including stock-based compensation expense, amortization of purchased intangible assets, amortization of acquisition-related fixed asset and inventory step-ups, acquisition-related costs, gain on sale of shares of an unconsolidated investee, net of direct cost, restructuring charges, fair value adjustment to contingent consideration, goodwill impairment charge, and the related tax effects of Non-GAAP adjustments. In computing adjusted EBITDA, the company also excludes interest (income) expense, net, provision for (benefit from) income taxes and depreciation expense.

Management uses these Non-GAAP financial measures to evaluate the operating performance of the business and aid in the period-to-period comparability. Management also uses the Non-GAAP financial measures for planning and forecasting and measuring results against its forecast. Using several measures to evaluate the business allows the company and investors to assess the company’s relative performance and ultimately monitor the company’s capacity to generate returns for its stockholders. The Non-GAAP financial measures provided herein may not provide information that is directly comparable to that provided by other companies in the company’s industry, as other companies may calculate such financial results differently. The company’s Non-GAAP financial measures are not measurements of financial performance under GAAP, and should not be considered as alternatives to the financial measures derived in accordance with GAAP. The company does not consider these Non-GAAP financial measures to be a substitute for, or superior to, the information provided by GAAP financial results. A reconciliation of the Non-GAAP financial measures to the most directly comparable GAAP financial measures is provided in the financial schedules portion of this press release.

 
NeoPhotonics Corporation
Consolidated Statements of Operations (Unaudited)
(In thousands, except percentages, share and per share data)
         
Three months ended Year ended

Dec. 31, 2012

 

Sep. 30, 2012

 

Dec. 31, 2011

 

Dec. 31, 2012

 

Dec. 31, 2011

 
Revenue $ 62,023 $ 66,152 $ 57,183 $ 245,423 $ 201,029
Cost of goods sold (1)   47,973     45,536     44,909     184,163     150,944  
Gross profit 14,050 20,616 12,274 61,260 50,085
22.7 % 31.2 % 21.5 % 25.0 % 24.9 %
Operating expenses:
Research and development (1) 8,535 9,893 11,039 38,288 30,855
Sales and marketing (1) 3,458 3,354 3,368 13,241 11,686
General and administrative (1) 5,351 6,770 7,287 25,808 21,900
Amortization of purchased intangible assets 320 321 326 1,316 994
Adjustment to fair value of contingent consideration (308 ) (850 ) (1,287 ) (554 ) (1,287 )
Goodwill impairment charges - - 13,106 - 13,106
Restructuring charges   (91 )   -     1,297     68     1,297  
Total operating expenses   17,265     19,488       35,136     78,167       78,551  
 
Income (loss) from operations   (3,215 )   1,128     (22,862 )   (16,907 )   (28,466 )
 
Interest income 168 147 253 592 407
Interest expense (134 ) (135 ) (192 ) (568 ) (422 )
Other income (expense), net   696     154     (53 )   575     14,246  
Total interest and other income (expense), net   730     166     8     599     14,231  
 
Income (loss) before income taxes (2,485 ) 1,294 (22,854 ) (16,308 ) (14,235 )
Benefit from (provision for) income taxes   (476 )   (571 )   22     (1,364 )   (1,155 )
Income (loss) from continuing operations (2,961 ) 723 (22,832 ) (17,672 ) (15,390 )
Income (loss) from discontinued operations, net of tax   (28 )   -     523     142     636  
Net income (loss) (2,989 ) 723 (22,309 ) (17,530 ) (14,754 )
Deemed dividend on beneficial conversion of Series X redeemable convertible preferred stock - - - - (17,049 )
Accretion of redeemable convertible preferred stock   -     -     -     -     (7 )
Net income (loss) attributable to NeoPhotonics Corporation common stockholders $ (2,989 ) $ 723   $ (22,309 ) $ (17,530 ) $ (31,810 )
 
Net income (loss) per share - Basic:
Continuing operations $ (0.10 ) $ 0.02 $ (0.92 ) $ (0.62 ) $ (1.45 )
Discontinued operations $ (0.00 ) $ -   $ 0.02   $ 0.00   $ 0.03  
Net income (loss) $ (0.10 ) $ 0.02   $ (0.90 ) $ (0.62 ) $ (1.42 )
 
Net income (loss) per share - Diluted:
Continuing operations $ (0.10 ) $ 0.02 $ (0.92 ) $ (0.62 ) $ (1.45 )
Discontinued operations $ (0.00 ) $ -   $ 0.02   $ 0.00   $ 0.03  
Net income (loss) $ (0.10 ) $ 0.02   $ (0.90 ) $ (0.62 ) $ (1.42 )
 
Weighted average shares used to compute net income (loss) per share:
Basic   30,414,735     30,215,144     24,807,478     28,529,849     22,359,802  
Diluted   30,414,735     30,611,304     24,807,478     28,529,849     22,359,802  
 
(1) Includes stock-based compensation expense (credit) as follows for the periods presented:
Cost of goods sold $ 248 $ 228 $ 120 $ 800 $ 503
Research and development 475 404 256 1,743 1,033
Sales and marketing 279 242 145 935 647
General and administrative   341     408     219     1,299     925  
Total stock-based compensation expense $ 1,343   $ 1,282   $ 740   $ 4,777   $ 3,108  
 
NeoPhotonics Corporation
Consolidated Balance Sheets (Unaudited)
(In thousands)
   
As of

Dec. 31, 2012

 

Dec. 31, 2011

ASSETS
Current assets:
Cash, cash equivalents and short-term investments $ 101,241 $ 86,384
Restricted cash 2,626 3,227
Accounts receivable, net 70,354 68,877
Inventories 43,793 35,341
Prepaid expenses and other current assets 7,701 5,882
Current assets held-for-sale   -     1,687  
Total current assets 225,715 201,398
Long-term investments 188 92
Property, plant and equipment, net 54,440 56,344
Other intangible assets, net 14,213 17,999
Other long-term assets 1,076 1,049
Long-term assets held-for-sale   -     167  
Total assets $ 295,632   $ 277,049  
 
LIABILITIES, REDEEMABLE COMMON STOCK AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 36,308 $ 37,599
Notes payable 12,003 14,620
Current portion of long-term debt 5,000 5,000
Accrued and other current liabilities 19,959 18,299
Current liabilities held-for-sale   -     1,681  
Total current liabilities 73,270 77,199
Long-term debt, net of current portion 17,167 22,166
Deferred income tax liabilities 653 927
Other noncurrent liabilities   1,724     3,103  
Total liabilities   92,814     103,395  
 
Redeemable common stock 5,000 -
Stockholders' equity:
Common stock 76 62
Additional paid-in capital 433,996 392,792
Accumulated other comprehensive income 11,829 11,353
Accumulated deficit   (248,083 )   (230,553 )
Total stockholders' equity   197,818     173,654  
 
Total liabilities, redeemable common stock and stockholders' equity $ 295,632   $ 277,049  
 
NeoPhotonics Corporation
Reconciliation of Consolidated GAAP Financial Measures to Non-GAAP Financial Measures (Unaudited)
(In thousands, except percentages, share and per share data)
         
Three months ended Year ended

December 31, 2012

September 30, 2012

December 31, 2011

December 31, 2012

December 31, 2011

 
NON-GAAP GROSS PROFIT:
GAAP gross profit $ 14,050 $ 20,616 $ 12,274 $ 61,260 $ 50,085
Stock-based compensation expense 248 228 120 800 503
Amortization of purchased intangible assets 642 616 532 2,472 598
Amortization of acquisition-related fixed asset step-up 225 243 292 1,512 292
Amortization of acquisition-related inventory step-up - - 215 - 215
Acquisition-related costs   50     40     12     148     12  
Non-GAAP gross profit $ 15,215   $ 21,743   $ 13,445   $ 66,192   $ 51,705  
Non-GAAP gross margin (% of revenue) 24.5 % 32.9 % 23.5 % 27.0 % 25.7 %
 
NON-GAAP INCOME (LOSS) FROM CONTINUING OPERATIONS:
GAAP income (loss) from continuing operations $ (2,961 ) $ 723 $ (22,832 ) $ (17,672 ) $ (15,390 )
Stock-based compensation expense 1,343 1,282 740 4,777 3,108
Amortization of purchased intangible assets 963 937 858 3,788 1,592
Amortization of acquisition-related fixed asset step-up 356 386 427 2,480 427
Amortization of acquisition-related inventory step-up - - 215 - 215
Acquisition-related costs 629 240 1,089 2,648 1,426
Gain on sale of shares of an unconsolidated investee, net of direct cost - - - - (13,829 )
Restructuring charges (91 ) 2 1,297 68 1,297
Fair value adjustment to contingent consideration (308 ) (850 ) (1,287 ) (554 ) (1,287 )
Goodwill impairment charge - - 13,106 - 13,106
Income tax effect of Non-GAAP adjustments   (56 )   (67 )   (6 )   (202 )   (227 )
Non-GAAP income (loss) from continuing operations $ (125 ) $ 2,653   $ (6,393 ) $ (4,667 ) $ (9,562 )
 
ADJUSTED EBITDA:
GAAP income (loss) from continuing operations $ (2,961 ) $ 723 $ (22,832 ) $ (17,672 ) $ (15,390 )
Stock-based compensation expense 1,343 1,282 740 4,777 3,108
Amortization of purchased intangible assets 963 937 858 3,788 1,592
Amortization of acquisition-related fixed asset step-up 356 386 427 2,480 427
Amortization of acquisition-related inventory step-up - - 215 - 215
Acquisition-related costs 629 240 1,089 2,648 1,426
Gain on sale of shares of an unconsolidated investee, net of direct cost - - - - (13,829 )
Restructuring charges (91 ) 2 1,297 68 1,297
Fair value adjustment to contingent consideration (308 ) (850 ) (1,287 ) (554 ) (1,287 )
Goodwill impairment charge - - 13,106 - 13,106
Interest (income) expense, net (34 ) (12 ) (61 ) (24 ) 15
Provision for (benefit from) income taxes 476 571 (22 ) 1,364 1,155
Depreciation expense   3,095     3,151     3,470     12,444     10,844  
Adjusted EBITDA $ 3,468   $ 6,430   $ (3,000 ) $ 9,319   $ 2,679  
 
NON-GAAP DILUTED INCOME (LOSS) PER SHARE FROM CONTINUING OPERATIONS:
GAAP diluted income (loss) per share from continuing operations $ (0.10 ) $ 0.02   $ (0.92 ) $ (0.62 ) $ (1.45 )
 
Non-GAAP diluted income (loss) per share from continuing operations $ (0.00 ) $ 0.08   $ (0.26 ) $ (0.16 ) $ (0.40 )
 
SHARES USED TO COMPUTE NON-GAAP DILUTED INCOME (LOSS) PER SHARE FROM CONTINUING OPERATIONS:
Shares used to compute GAAP diluted income (loss) per share from continuing operations   30,414,735     30,611,304     24,807,478     28,529,849     22,359,802  
Shares used to compute non-GAAP diluted income (loss) per share from continuing operations   30,414,735     31,393,431     24,807,478     28,529,849     24,027,658  




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