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Novatel Wireless Reports Fourth Quarter And Fiscal Year 2012 Preliminary Financial Results

Stocks in this article: NVTL

(C) 2013 Novatel Wireless. All rights reserved. MiFi, Expedite, Enabler, Enfora, N4A, and the Novatel Wireless name and logo are trademarks of Novatel Wireless, Inc. Other product or service names mentioned herein are the trademarks of their respective owners.

 
NOVATEL WIRELESS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
         
 
December 31, December 31,
2012 2011

(Preliminary and unaudited)

ASSETS
 
Current assets:
 
Cash and cash equivalents $ 16,044 $ 47,069
Marketable securities 38,064 28,267
Accounts receivable, net 42,652 36,849
Inventories 39,016 42,279
Deferred tax assets, net 126 2,011
Prepaid expenses and other   4,829     3,712  
Total current assets 140,731 160,187
 
Property and equipment, net 15,229 18,496
 
Marketable securities 1,201 13,495
 
Intangible assets, net 3,163 35,702
 
Goodwill - 19,772
 
Deferred tax assets, net 584 1,023
 
Other assets   623     504  
Total assets $ 161,531   $ 249,179  
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
Current liabilities:
 
Accounts payable $ 45,732 $ 54,030
Accrued expenses   27,800     25,044  
Total current liabilities 73,532 79,074
 
Other long-term liabilities   2,552     4,080  
 
Total liabilities   76,084     83,154  
 
Stockholders' equity:
 
Common stock 34 32
Additional paid-in capital 438,477 429,813
Accumulated other comprehensive income (loss) 14 (8 )
Accumulated deficit   (328,078 )   (238,812 )
110,447 191,025
Treasury stock at cost   (25,000 )   (25,000 )
Total stockholders' equity   85,447     166,025  
 
Total liabilities and stockholders' equity $ 161,531   $ 249,179  
 
 

NOVATEL WIRELESS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
                 
 
Three Months Ended Twelve Months Ended
December 31, December 31,
  2012     2011     2012     2011  

(Preliminary and unaudited)

(Unaudited)

(Preliminary and unaudited)

 
Net revenues $ 70,675 $ 109,794 $ 344,288 $ 402,862
Cost of net revenues   57,117     84,068     271,845     318,270  
Gross profit   13,558     25,726     72,443     84,592  
 
Operating costs and expenses:
Research and development 15,440 15,875 60,422 61,392
Sales and marketing 6,246 7,025 27,501 29,830
General and administrative 6,607 5,050 22,668 21,600
Goodwill and intangible assets impairment (300 ) (237 ) 49,521 3,277
Amortization of purchased intangible assets   183     521     1,074     2,220  
Total operating costs and expenses   28,176     28,234     161,186     118,319  
 
Operating loss (14,618 ) (2,508 ) (88,743 ) (33,727 )
 
Other income (expense):
Interest income, net 53 81 291 384
Other income (expense), net   (12 )   112     (203 )   (1,052 )
 
Loss before income taxes (14,577 ) (2,315 ) (88,655 ) (34,395 )
 
Income tax (benefit) provision 335 1,089 611 (9,503 )
       
Net loss $ (14,912 ) $ (3,404 ) $ (89,266 ) $ (24,892 )
 
Per share data:
 
Net loss per share:
Basic and diluted $ (0.45 ) $ (0.11 ) $ (2.72 ) $ (0.78 )
 

Weighted average shares used in computation of net loss per share:

Basic and diluted   33,356     32,154     32,852     32,043  
 
 

NOVATEL WIRELESS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
             
 
Three Months Ended Twelve Months Ended
December 31, December 31,
2012 2011 2012 2011

(Preliminary and unaudited)

(Unaudited)

(Preliminary and unaudited)

Cash flows from operating activities:
Net loss $ (14,912 ) $ (3,404 ) $ (89,266 ) $ (24,892 )
Adjustments to reconcile net loss to
net cash provided by (used in) operating activities:
Depreciation and amortization 2,590 4,086 12,337 17,868
Loss on goodwill and purchased intangible assets impairment (300 ) (237 ) 49,521 3,277
Impairment loss on equipment and software license intangible assets 10 70 100 203
Provision for bad debts 400 (19 ) 439 40
Net impairment loss on marketable securities - - 39 346
Inventory provision 1,180 113 2,843 689
Share-based compensation expense 2,091 1,926 7,500 5,983
Non-cash income tax expense (benefit) 931 2,102 1,125 (9,185 )
Changes in assets and liabilities:
Accounts receivable (2,782 ) 17,391 (6,242 ) 26,437
Inventories (3,669 ) 6,756 420 122
Prepaid expenses and other assets 1 177 (1,237 ) 3,661
Accounts payable 4,741 (352 ) (10,367 ) (24,293 )
Accrued expenses, income taxes, and other   2,632     (3,438 )   2,865     (1,787 )
 
Net cash provided by (used in) operating activities   (7,087 )   25,171     (29,923 )   (1,531 )
 
Cash flows from investing activities:
Purchases of property and equipment (514 ) (1,059 ) (4,535 ) (5,987 )
Purchases of intangible assets (104 ) (65 ) (104 ) (284 )
Purchases of marketable securities (12,345 ) (15,626 ) (44,216 ) (36,992 )
Marketable securities maturities/sales   19,190     16,383     46,696     74,922  
Net cash provided by (used in) investing activities   6,227     (367 )   (2,159 )   31,659  
Cash flows from financing activities:
Proceeds from the issuance of short-term debt, net of issuance costs 9,000 - 14,000 12,000
Principal repayments of short-term debt (9,000 ) - (14,000 ) (12,000 )
Principal payments under capital lease obligations - (28 ) (46 ) (109 )

Proceeds from stock option exercises and ESPP net of taxes paid on vested restricted stock units

  583     421     1,166     (196 )
Net cash provided by (used in) financing activities 583 393 1,120 (305 )
Effect of exchange rates on cash and cash equivalents   (20 )   (55 )   (63 )   (129 )
 
Net increase (decrease) in cash (297 )

 

25,142 (31,025 ) 29,694
Cash and cash equivalents, beginning of period   16,341     21,927     47,069     17,375  
Cash and cash equivalents, end of period $ 16,044  

 

$ 47,069   $ 16,044   $ 47,069  
 
 

Novatel Wireless, Inc.
Preliminary Reconciliation of GAAP Net Loss to Non-GAAP Net Loss
Three Months and Twelve Months Ended December 31, 2012
(in thousands, except per share data)
(Unaudited)
               
 
Three Months Ended Twelve Months Ended

December 31, 2012

December 31, 2012

Net Income (Loss)

Income (Loss) Per Share, Diluted

Net Income (Loss)

Income (Loss) Per Share, Diluted

 
GAAP net loss $ (14,912 ) $ (0.45 ) $ (89,266 ) $ (2.72 )
 
Adjustments:
Share-based compensation expense (a) 2,091 0.06 7,500 0.23
 
Acquisition related charges (b) 267 0.01 2,697 0.08
 
Goodwill & Intangibles impairment (c) (300 ) (0.01 ) 49,521 1.51
 
Income tax adjustments (d) 297 0.01 429 0.01
 
Severance (e)   -     -     890     0.03  
Non-GAAP net loss $ (12,557 ) $ (0.38 ) $ (28,229 ) $ (0.86 )
 
(a) Adjustments reflect share-based compensation expense recorded under ASC Topic 718. The adjustment in Q4 2012 includes $965k for employee stock purchase plan cancellation charges.
 
(b) Adjustments reflect amortization of purchased intangibles.
 

(c) Adjustments reflect goodwill and purchased intangibles impairments resulting from interim impairment analyses conducted during the 1st and 3rd quarters of 2012.

 
(d) Adjustments for uncertain tax benefits and valuation provisions on deferred tax assets.
 
(e) Adjustments reflect reduction in force costs.
 
See "Non -GAAP Financial Measures" for information regarding our use of Non-GAAP financial measures.
 
 

Novatel Wireless, Inc.
Preliminary Reconciliation of GAAP Operating Costs and Expenses to Non-GAAP Operating Costs and Expenses
Three Months Ended December 31, 2012
(in thousands)
(Unaudited)
         
 
GAAP

Share-based compensation expense (a)

Purchased intangibles amortization (b)

Goodwill and purchased intangibles impairments (c)

  Non-GAAP
 
Cost of net revenues $ 57,117   $ 204 $ 84 $ -     $ 56,829
 
Operating costs and expenses:
Research and development 15,440 1,010 - - 14,430
Sales and marketing 6,246 336 - - 5,910
General and administrative 6,607 541 - - 6,066
Goodwill and intangible assets impairment (300 ) - - (300 ) -
Amortization of purchased intangibles   183     -   183   -       -
Total operating costs and expenses $ 28,176     1,887   183   (300 )   $ 26,406
 
Total $ 2,091 $ 267 $ (300 )
 
 
(a) Adjustments reflect share-based compensation expense recorded under ASC Topic 718. The adjustment in Q4 2012 includes $965k for employee stock purchase plan cancellation charges.
 
(b) Adjustments reflect amortization of purchased intangibles.
 
(c) Includes adjusted impairment charges for goodwill and purchased intangibles
 
See "Non -GAAP Financial Measures" for information regarding our use of Non-GAAP financial measures.
 
 

Novatel Wireless, Inc.
Preliminary Reconciliation of GAAP Operating Costs and Expenses to Non-GAAP Operating Costs and Expenses
Twelve Months Ended December 31, 2012
(in thousands)
(Unaudited)
             
 
GAAP

Share-based compensation expense (a)

Purchased intangibles amortization (b)

Goodwill and purchased intangibles impairments (c)

Severance (d) Non-GAAP
 
Cost of net revenues $ 271,845 $ 747 $ 1,623 $ - $ 53 $ 269,422
 
Operating costs and expenses:
Research and development 60,422 3,042 - - 555 56,825
Sales and marketing 27,501 1,403 - - 85 26,013
General and administrative 22,668 2,308 - - 197 20,163
Goodwill and intangible assets impairment 49,521 - - 49,521 - -
Amortization of purchased intangibles   1,074   -   1,074   -   -   -
Total operating costs and expenses $ 161,186   6,753   1,074   49,521   837 $ 103,001
 
Total $ 7,500 $ 2,697 $ 49,521 $ 890
 
 
(a) Adjustments reflect share-based compensation expense recorded under ASC Topic 718. Q4 2012 includes $965k for employee stock purchase plan cancellation charges.
 
(b) Adjustments reflect amortization of purchased intangibles.
 
(c) Adjustments reflect goodwill and purchased intangibles impairment resulting from interim impairment analyses conducted during the 1st and 3rd quarters of 2012.
 
(d) Includes reduction in force costs.
 
See "Non -GAAP Financial Measures" for information regarding our use of Non-GAAP financial measures.
 
 

Novatel Wireless, Inc.
Preliminary Reconciliation of GAAP Loss before Income Taxes to Adjusted EBITDA
Three and Twelve Months Ended December 31, 2012
(in thousands)
(Unaudited)
     
Three Months Ended Twelve Months Ended
December 31, 2012 December 31, 2012
 
Loss before income taxes $ (14,577 ) $ (88,655 )
Depreciation and amortization 2,590 12,337
Goodwill & purchased intangibles impairment (300 ) 49,521
Share-based compensation expense 2,091 7,500
Severance - 890
Other expense (income)   (41 )   (88 )
Adjusted EBITDA $ (10,237 ) $ (18,495 )
 
See "Non -GAAP Financial Measures" for information regarding our use of Non-GAAP financial measures.
 
 

NOVATEL WIRELESS, INC.
Segment Reporting
Three and Twelve Months Ended December 31, 2012
(in thousands)
         
 
Three Months Ended Twelve Months Ended
December 31, December 31,
2012 2011 2012 2011

(Preliminary and unaudited)

(Unaudited)

(Preliminary and unaudited)

Net revenues by reportable segment:

Mobile Computing Products $ 63,888 $ 99,838 $ 312,508 $ 358,106
M2M Products and Solutions   6,787     9,956     31,780     44,756  
Total $ 70,675   $ 109,794   $ 344,288   $ 402,862  
 

Operating income (loss) :

Mobile Computing Products $ (11,223 ) $ 595 $ (22,924 ) $ (13,764 )
M2M Products and Solutions   (3,395 )   (3,103 )   (65,819 )   (19,963 )
Total $ (14,618 ) $ (2,508 ) $ (88,743 ) $ (33,727 )
 
 

December 31,

December 31,
2012 2011

(Preliminary and unaudited)

Identifiable assets by reportable segment:

Mobile Computing Products $ 141,045 $ 181,180
M2M Products and Solutions   20,486     67,999  
Total $ 161,531   $ 249,179  




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