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Pulse Electronics Corporation Reports Second Quarter Results

Based on discussions with investors and analysts, the company believes 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 may 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, debt restructuring and related costs, legal reserve charges, 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 © 2013 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

6/28/13

 

6/29/12

6/28/13

 

6/29/12

 
Net sales $ 88,258 $ 100,383 $ 173,064 $ 194,518
Cost of sales   67,508     81,179     132,133     156,916  
Gross profit 20,750 19,204 40,931 37,602
Operating expenses 19,008 18,742 38,182 37,735
Severance, impairment and other associated costs 93 515 112 2,052
Legal reserve   37     50     75     50  
Operating profit (loss) 1,612 (103 ) 2,562 (2,235 )
 
Interest expense, net (6,774 ) (3,752 ) (11,888 ) (6,345 )
Other expense, net   (408 )   (1,148 )   (2,940 )   (69 )
Loss before income taxes (5,570 ) (5,003 ) (12,266 ) (8,649 )
Income tax (expense) benefit   349     (1,491 )   (84 )   (2,148 )
Net loss (5,221 ) (6,494 ) (12,350 ) (10,797 )
Less: Net earnings (loss) attributable to non-controlling interest   9     (97 )   (5 )   (294 )
Net loss attributable to Pulse Electronics Corporation (5,230 ) (6,397 ) (12,345 ) (10,503 )
 
Basic shares outstanding 7,994 4,169 7,976 4,155
Basic loss per share (0.65 ) (1.53 ) (1.55 ) (2.53 )
 
Diluted shares outstanding 7,994 4,169 7,976 4,155
Diluted loss per share (0.65 ) (1.53 ) (1.55 ) (2.53 )

 
BUSINESS SEGMENT INFORMATION (UNAUDITED)
(in thousands)
  Three Months Ended   Six Months Ended

6/28/2013

 

6/29/2012

6/28/2013

 

6/29/2012

Net Sales
Network $ 38,454 $ 41,699 $ 74,285 $ 80,453
Power 29,554 32,121 57,139 63,811
Wireless   20,250     26,563     41,640     50,254  
Total net sales 88,258 100,383 173,064 194,518
 
Operating profit (loss)
Network 922 817 2,254 (56 )
Power 1,910 2,045 3,079 4,377
Wireless   (1,090 )   (2,400 )   (2,584 )   (4,454 )
Operating profit (loss) excluding severance, impairment and other associated costs, and legal reserve costs 1,742 462 2,749 (133 )
Severance, impairment and other associated costs 93 515 112 2,052
Legal reserve   37     50     75     50  
Operating profit (loss) $ 1,612 $ (103 ) $ 2,562 $ (2,235 )
 
FINANCIAL POSITION (UNAUDITED)
(in thousands)

6/28/2013

12/28/2012

 
Cash and cash equivalents $ 23,163 $ 31,475
Accounts receivable, net 62,716 62,957
Inventory, net 31,909 31,434
Prepaid expenses and other current assets 16,780 21,500
Net property, plant and equipment 30,552 29,406
Other assets   14,182     11,826  
Total assets 179,302 188,598
 
 
Accounts payable $ 63,432 $ 65,883
Accrued expenses and other current liabilities 33,239 44,197
Warrant liability - 12,175
Long-term debt 106,539 96,753
Other long-term liabilities   16,033     19,134  
Total liabilities 219,243 238,142
Total deficit   (39,941 )   (49,544 )
 
Total liabilities and deficit $ 179,302 $ 188,598
 
Shares outstanding 7,959 7,947

 

Schedule A

NON-GAAP MEASURES (UNAUDITED)
(in thousands, except per-share amounts)
       
 
1. Operating profit (loss) excluding severance, impairment and other associated costs, legal reserve costs, non-cash stock-based compensation expenses and other adjustments
 

Quarter Ended

Six Months Ended

6/28/13

6/29/12

6/28/13

6/29/12

 
Operating profit (loss) $ 1,612 $ (103 ) $ 2,562 $ (2,235 )
Pre-tax severance, impairment and other associated costs 93 515 112 2,052
Pre-tax non-cash stock-based compensation expenses 423 433 1,002 840
Pre-tax legal reserve   37     50     75     50  
Operating profit excluding severance, impairment and other associated costs, legal reserve costs, non-cash stock-based compensation expenses and other adjustments 2,165 895 3,751 707
 
 
2. Net (loss) earnings per diluted share excluding severance, impairment and other associated costs, legal reserve costs, and non-cash stock-based compensation expenses and other adjustments
 

Quarter Ended

Six Months Ended

6/28/13

6/29/12

6/28/13

6/29/12

 
Net loss per diluted share $ (0.65 ) $ (1.53 ) $ (1.55 ) $ (2.53 )
After-tax severance, impairment and other associated costs, per share 0.01 0.12 0.01 0.37
After-tax non-cash stock-based compensation expenses, per share 0.03 0.07 0.08 0.13
After-tax legal reserve, per share   0.01     0.01     0.01     0.01  
Net loss per diluted share excluding severance, impairment and other associated costs, legal reserve costs, non-cash stock-based compensation expenses and other adjustments (0.60 ) (1.33 ) (1.45 ) (2.02 )
 
3. Adjusted EBITDA

Quarter Ended

6/28/13

6/29/12

 
Net loss attributable to Pulse Electronics Corporation $ (5,230 ) $ (6,397 )
Non-controlling interest 9 (97 )
Income tax (benefit) expense (349 ) 1,491
Interest expense, net 6,774 3,752
Non-cash stock-based compensation expenses 423 433
Depreciation and amortization 1,862 1,942
Other expense, net 408 1,148
Severance, impairment and other associated costs 93 515
Legal reserve   37     50  
Adjusted EBITDA 4,027 2,837




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