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Pulse Electronics Corporation Reports Third 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, and legal reserve charges 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 Nine Months Ended
9/27/13 9/28/12 9/27/13 9/28/12
 
Net sales $ 94,840 $ 88,233 $ 267,904 $ 282,751
Cost of sales   73,194     71,281     205,327     228,198  
Gross profit 21,646 16,952 62,577 54,553
Operating expenses 18,417 18,049 56,599 55,784
Severance, impairment and other associated costs 2,670 3,851 2,782 5,901
Debt restructuring and related costs -- 814 -- 814
Legal reserve   36     --     111     50  
Operating profit (loss) 523 (5,762 ) 3,085 (7,996 )
 
Interest expense, net (6,231 ) (3,754 ) (18,119 ) (10,099 )
Other income (expense), net   57     948     (2,883 )   877  
Loss before income taxes (5,651 ) (8,568 ) (17,917 ) (17,218 )
Income tax expense   (1,937 )   (356 )   (2,021 )   (2,504 )
Net loss (7,588 ) (8,924 ) (19,938 ) (19,722 )
Less: Net earnings (loss) attributable to non-controlling interest   44     35     39     (259 )
Net loss attributable to Pulse Electronics Corporation (7,632 ) (8,959 ) (19,977 ) (19,463 )
 
Basic shares outstanding 8,007 4,243 8,016 4,183
Basic loss per share (0.95 ) (2.11 ) (2.49 ) (4.65 )
 
Diluted shares outstanding 8,007 4,243 8,016 4,183
Diluted loss per share (0.95 ) (2.11 ) (2.49 ) (4.65 )
 

 
BUSINESS SEGMENT INFORMATION (UNAUDITED)
(in thousands)
    Three Months Ended         Nine Months Ended
9/27/2013     9/28/2012 9/27/2013     9/28/2012
Net Sales
Network $ 39,472 $ 39,902 $ 113,757 $ 120,355
Power 28,116 28,932 85,255 92,743
Wireless   27,252     19,399     68,892     69,653  
Total net sales 94,840 88,233 267,904 282,751
 
Operating profit (loss)
Network 1,726 2,487 3,980 2,431
Power 2,170 678 5,249 5,056
Wireless   (667 )   (4,262 )   (3,251 )   (8,718 )

Operating profit (loss) excluding severance, impairment and other associated costs, and legal reserve costs

3,229 (1,097 ) 5,978 (1,231 )
Severance, impairment and other associated costs 2,670 3,851 2,782 5,901
Debt restructuring and related costs -- 814 -- 814
Legal reserve   36     --     111     50  
Operating profit (loss) $ 523 $ (5,762 ) $ 3,085 $ (7,996 )
 
FINANCIAL POSITION (UNAUDITED)
(in thousands) 9/27/2013 12/28/2012
 
Cash and cash equivalents $ 25,580 $ 31,475
Accounts receivable, net 67,462 62,957
Inventory, net 32,860 31,434
Prepaid expenses and other current assets 19,861 21,500
Net property, plant and equipment 28,900 29,406
Other assets   13,557     11,826  

Total assets

188,220 188,598
 
 
Accounts payable $ 71,662 $ 65,883
Accrued expenses and other current liabilities 37,216 44,197
Warrant liability - 12,175
Long-term debt 107,820 96,753
Other long-term liabilities   18,448     19,134  
Total liabilities 235,146 238,142
Total deficit   (46,926 )   (49,544 )
 
Total liabilities and deficit $ 188,220 $ 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 Nine Months Ended
9/27/13 9/28/12 9/27/13 9/28/12
 
Operating profit (loss) $ 523 $ (5,762 ) $ 3,085 $ (7,996 )
Pre-tax severance, impairment and other associated costs 2,670 3,851 2,782 5,901
Pre-tax non-cash stock-based compensation expenses 420 483 1,422 1,323
Pre-tax debt restructuring and related costs -- 814 -- 814
Pre-tax legal reserve   36     --     111     50  
Operating profit (loss) excluding severance, impairment and other associated costs, legal reserve costs, non-cash stock-based compensation expenses, debt restructuring and related costs and other adjustments 3,649 (614 ) 7,400 92
 
 
2. Net loss 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 Nine Months Ended
9/27/13 9/28/12 9/27/13 9/28/12
 
Net loss per diluted share $ (0.95 ) $ (2.11 ) $ (2.49 ) $ (4.65 )
After-tax severance, impairment and other associated costs, per share 0.24 0.84 0.25 1.06
After-tax non-cash stock-based compensation expenses, per share 0.03 0.07 0.11 0.21
After-tax debt restructuring and related costs, per share -- 0.12 -- 0.13
After-tax legal reserve, per share   0.00     --     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 (0.68 ) (1.08 ) (2.12 ) (3.24 )
 
3. Adjusted EBITDA Quarter Ended
9/27/13 9/28/12
 
Net loss attributable to Pulse Electronics Corporation $ (7,632 ) $ (8,959 )
Non-controlling interest 44 35
Income tax expense 1,937 356
Interest expense, net 6,231 3,754
Non-cash stock-based compensation expenses 420 483
Depreciation and amortization 1,823 2,040
Other income, net (57 ) (948 )
Severance, impairment and other associated costs 2,670 3,851
Debt restructuring and related costs -- 814
Legal reserve   36     --  
Adjusted EBITDA 5,472 1,426




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