Ditech Networks Reports Financial Results For The Three And Twelve Month Periods Ending April 30, 2011

Ditech Networks, Inc. (NASDAQ:DITC), a leader in voice solutions for quality and transcription, reported financial results for the three and twelve month periods ending April 30, 2011.

The financial results for the quarter ended April 30, 2011 were as follows:
  • Revenues were $5.3 million, down from $5.6 million from last quarter and $7.3 million in the corresponding period last year.
  • GAAP operating expense for the quarter was $4.7 million, up from $4.6 million last quarter and down from $6.3 million for the corresponding quarter last year.
  • Non-GAAP(1) operating expenses were $4.4 million.
  • GAAP net income for the quarter was $0.5 million or $0.02 per share.
  • Non-GAAP(1) net income for the quarter was $0.9 million or $0.03 per share.

The financial results for the twelve months ended April 30, 2011 were as follows:
  • Revenues were $18.6 million.
  • Cash used in operations was $3.6 million.
  • GAAP operating expenses were $20.0 million.
  • Non-GAAP(1) operating expenses were $18.6 million.
  • GAAP Net loss was $8.4 million or $0.32 per share.
  • Non-GAAP(1) net loss was $7.0 million or $0.27 per share.

(1) A reconciliation of the non-GAAP to GAAP financial measures for fiscal 2011 and 2010 is included at the end of this press release. These non-GAAP financial measures exclude stock-based compensation expense, the expense related to amortization of purchased intangible assets, severance and restructuring costs, and the tax effects of the excluded amounts.

About Ditech Networks

Ditech Networks is revolutionizing modern communications with advanced voice processing solutions that perform tasks spanning from voice-enabled Web 2.0 and unified communications services to voice quality enhancement. Ditech Networks believes in the power and simplicity of human speech; its solutions deliver high-quality voice communication and will enable compelling voice capabilities to new communications methods like social networking and text messaging, allowing consumers to use voice in ways that make sense in today's Web 2.0-savvy world.

Leveraging over 20 years of deployments with communications providers around the world, Ditech Networks' products help global communications companies meet the multiple challenges of service differentiation, network expansion and call capacity, by delivering consistent, dependable voice quality. Ditech Networks' customers include Verizon, Sprint/Nextel, Orascom Telecom, AT&T, Telus, Global Crossing and West Corporation. Ditech Networks is headquartered in Mountain View, California.

Use of Non-GAAP Financial Information

Ditech Networks provides all information required in accordance with generally accepted accounting principles (GAAP), but it believes that evaluating its ongoing operating results and in particular, making comparisons to similar companies, may be enhanced by providing additional measures used by management to assess operating results. Internally, Ditech Networks uses calculations of: (i) non-GAAP gross profit and gross margin, which represents gross profit and gross margin excluding the effect of stock-based compensation expense and severance and restructuring costs; (ii) non-GAAP operating expenses, which represent operating expenses excluding the effect of stock-based compensation expense and severance and restructuring costs and, in the case of total operating expenses, expense related to amortization of intangible assets; (iii) non-GAAP pre-tax loss and non-GAAP net loss, which represents pre-tax loss and net loss excluding the effect of stock-based compensation expense, severance and restructuring costs and expense related to the amortization of intangible assets; and (iv) non-GAAP basic and diluted net loss per share, which represents basic and diluted net loss per share excluding the effect of stock-based compensation expense, severance and restructuring costs and expense related to the amortization of intangible assets. The non-GAAP net loss and net loss per share financial measures also exclude the tax effects of the excluded amounts.

The non-GAAP financial measures contained in this release are included with the intention of providing investors additional understanding of Ditech Networks' operational results and trends, but should only be used in conjunction with results reported in accordance with GAAP.
 
Ditech Networks, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
       
 
 
April 30, April 30,
2011 2010
 
Assets
Cash, cash equivalents and investments $27,522 $34,534
Accounts receivable, net 1,851 2,440
Inventories 4,689 5,985
Property and equipment, net 1,164 2,370
Purchased intangibles 441 522
Other assets 5,051 7,103
Total Assets $40,718 $52,954
 
 
 
Liabilities and Stockholders' Equity
Accounts payable $858 $892
Accrued expenses and other short-term accrued liabilities 1,632 2,695
Deferred revenue 530 890
Income taxes payable 50 66
Other long-term liabilities - 3,665
 
Total Liabilities 3,070 8,208
 
Stockholders' equity 37,648 44,746
 
Total Liabilities and Stockholders' Equity $40,718 $52,954
 
Ditech Networks, Inc.
Consolidated Statements of Operations
For the Three and Twelve Month Periods Ended April 30, 2011 and 2010
(in thousands, except per share amounts)
(unaudited)
         
 
 
Three Months Ended April 30, Twelve Months Ended April 30,
2011 2010 2011 2010
 
Revenue $5,285 $7,301 $18,563 $22,864
 
Cost of goods sold 2,492 3,234 9,422 11,224
 
Gross profit 2,793 4,067 9,141

 
11,640
 
Operating expenses:
Sales and marketing 1,815 2,797 7,481 9,772
Research and development 1,938 2,289 7,715 10,561
General and administrative 946 1,221 4,691 5,466
Amortization of purchased intangible assets 20 31 80 62
 
Total operating expenses 4,719 6,338 19,967

 
25,861
 
Loss from operations (1,926) (2,271) (10,826) (14,221)
 
Other income (expense), net 2,439 (31) 2,381 (690)
 
Income (loss) before provision for income taxes 513 (2,302) (8,445) (14,911)
 
Provision for (benefit from) income taxes (31) (97) (43) (33)
 
Net income (loss) $544 ($2,205) ($8,402)

 
($14,878)
 
Basic net income (loss) per share: $0.02 ($0.08) ($0.32) ($0.57)
Diluted net income (loss) per share $0.02 ($0.08) ($0.32) ($0.57)
 
Weighted shares used in per share calculation:
Basic 26,396 26,251 26,370 26,210
Diluted 26,749 26,251 26,370 26,210
 
Stock-based compensation expense allocated by function was as follows:
Cost of goods sold $14 $31 $72 $166
Sales and marketing 80 117 387 472
Research and development 55 76 225 300
General and administrative 100 143 550 759
Total $249 $367 $1,234 $1,697
 
Ditech Networks, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
For the Three and Twelve Month Periods Ended April 30, 2011 and 2010
(in thousands, except per share amounts)
(unaudited)
       
 
 
Three Months Ended April 30,   Twelve Months Ended April 30,
2011 2010 2011 2010
 
GAAP gross profit $2,793 $4,067 $9,141 $11,640
Add back severance and restructuring costs - - - 256
Add back stock-based compensation 14 31 72 166
Non-GAAP gross profit $2,807 $4,098 $9,213 $12,062
 
GAAP gross margin 52.8% 55.7% 49.2% 50.9%
Add back severance and restructuring costs 0.0% 0.0% 0.0% 1.2%
Add back stock-based compensation 0.3% 0.4% 0.4% 0.7%
Non-GAAP gross margin 53.1% 56.1% 49.6% 52.8%
 
GAAP sales and marketing expense $1,815 $2,797 $7,481 $9,772
Add back (deduct) severance and restructuring costs (105) - (97) (64)
Deduct stock-based compensation (80) (117) (387) (472)
Non-GAAP sales and marketing expense $1,630 $2,680 $6,997 $9,236
 
GAAP research and development expense $1,938 $2,289 $7,715 $10,561
Add back (deduct) severance and restructuring costs - - 7 (255)
Deduct stock-based compensation (55) (76) (225) (300)
Non-GAAP research and development expense $1,883 $2,213 $7,497 $10,006
 
GAAP general and administrative expense $946 $1,221 $4,691 $5,466
Deduct severance and restructuring costs - - - (92)
Deduct stock-based compensation (100) (143) (550) (759)
Non-GAAP general and administrative expense $846 $1,078 $4,141 $4,615
 
GAAP total operating expenses $4,719 $6,338 $19,967 $25,861
Deduct:
Severance and restructuring costs (105) - (90) (411)
Stock-based compensation expense (235) (336) (1,162) (1,531)
Amortization of purchased intangibles (20) (31) (80) (62)
Non-GAAP total operating expenses $4,359 $5,971 $18,635 $23,857
 
GAAP loss from operations ($1,926) ($2,271) ($10,826) ($14,221)

Addback severance and restructuring costs, stock-based compensationexpense, and amortization of purchased intangibles
374 398 1,404 2,426
Non-GAAP loss from operations ($1,552) ($1,873) ($9,422) ($11,795)
 
GAAP income (loss) before provision for (benefit from) for income taxes $513 ($2,302) ($8,445) ($14,911)

Addback severance and restructuring costs, stock-based compensationexpense, and amortization of purchased intangibles
374 398 1,404 2,426
Non-GAAP income (loss) before provision for (benefit from) for income taxes $887 ($1,904) ($7,041) ($12,485)
 
GAAP provision for (benefit from) for income taxes ($31) ($97) ($43) ($33)

Deduct the tax impact of eliminating severance and restructuring costs,stock-based compensation expense, and amortization of purchased intangibles
- - - -
Non-GAAP provision for (benefit from) for income taxes ($31) ($97) ($43) ($33)
 
GAAP net income (loss) $544 ($2,205) ($8,402) ($14,878)

Addback severance and restructuring costs, stock-based compensationexpense, amortization of purchased intangibles, and adjustment to tax provision
374 398 1,404 2,426
Non-GAAP net income (loss) $918 ($1,807) ($6,998) ($12,452)
 
GAAP diluted net income (loss) per share $0.02 ($0.08) ($0.32) ($0.57)

Addback severance and restructuring costs, stock-based compensationexpense, amortization of purchased intangibles, and adjustment to tax provision
0.01 0.01 0.05 0.09
Non-GAAP diluted net income per share $0.03 ($0.07) ($0.27) ($0.48)
 
Shares used in computing net income (loss) per share
Diluted-GAAP 26,749 26,251 26,370 26,210
Diluted-Non-GAAP 26,749 26,251 26,370 26,210

Copyright Business Wire 2010

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