The company had $25.6 million of cash and cash equivalents at September 27, 2013 compared with $31.5 million at December 28, 2012. The decrease in cash mainly reflects capital expenditures, refinancing transaction fees and expenses, and working capital needs. In the third quarter the company generated $5.8 million in cash flow from operations and increased its overall cash balance from the second quarter by $2.4 million.
Expense Reduction Initiative
As part of the $2.7 million of severance, impairment, and associated costs noted above, the company recorded $0.5 million in severance expense related to actions taken as part of its previously announced expense reduction initiative and expects to begin to realize savings from those actions in the fourth quarter. The initiative is on track to achieve the expected $6 million annualized savings by the end of the first quarter of 2014.
The company believes it has a number of options regarding the retirement of its $22.3 million of outstanding senior convertible notes prior to maturity, including public and/or private exchange transactions. The company is actively pursuing these options with the goal of achieving the best possible outcome for all stakeholders; however, there can be no assurance that the company will be successful in these efforts.
Fourth Quarter 2013 Outlook
“As we look to the fourth quarter, the industry environment continues to appear muted for our network and power segments, uncertainty surrounding government military spending is ongoing given the temporary resolution to U.S. budget issues, and the velocities of the production ramps for the smartphone programs on which we participate are varying,” said Mr. Faison. “Accordingly, and consistent with typical seasonality in our markets, we expect overall demand to be slightly lower in the fourth quarter. However, with the favorable impact from ongoing cost and expense reductions, we expect non-GAAP operating profit to achieve levels similar to the third quarter despite the slightly lower revenue.”