Press release

Lattice Semiconductor Reports Second Quarter 2019 Results

0
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Lattice Semiconductor Corporation (NASDAQ: LSCC), the low power programmable leader, announced financial results today for the fiscal second quarter ended June 29, 2019.

Jim Anderson, President and Chief Executive Officer, said, “We achieved the highest profitability level in over a decade, with a record high in operating income percentage and significant improvements across key metrics, such as EPS. We continue to drive operational improvements and we are also benefiting from strength in our communications, computing, and industrial markets. We are pleased with our progress and remain focused on execution and driving further improvement, as we unlock additional value for the company and its shareholders.”

Sherri Luther, Chief Financial Officer, said, “In addition to driving a 42.6% improvement in non-GAAP diluted EPS in Q2 2019 compared to Q1 2019, we achieved a major improvement in cash generation, with $44.7 million in cash provided by operations in Q2 2019. We made $40 million in discretionary debt payments reducing our non-GAAP debt leverage ratio below 2, as defined in the credit agreement, and refinanced our corporate debt on more favorable terms. We continue to focus on profitability and cash generation, as we execute on our gross margin expansion strategy.”

Selected Second Quarter 2019 Financial Results and Comparisons (in thousands, except per share data)

 

 

GAAP Quarterly Financial Results

 

 

Q2 2019

 

Q1 2019

 

Q2 2018

 

Q/Q

 

Y/Y

Revenue

 

$

 

102,296

 

 

$

 

98,091

 

 

$

 

102,715

 

 

+ 4.3

%

 

(0.4

%)

Gross Margin %

 

 

58.7

%

 

 

58.8

%

 

 

48.9

%

 

(10) bps

 

+ 980 bps

R&D Expense %

 

 

18.9

%

 

 

20.0

%

 

 

20.5

%

 

(110) bps

 

(160) bps

SG&A Expense %

 

 

19.3

%

 

 

21.2

%

 

 

20.5

%

 

(190) bps

 

(120) bps

Operating Expense

 

$

 

45,652

 

 

$

 

45,176

 

 

$

 

63,812

 

 

+ 1.1

%

 

(28.5

%)

Operating Income

 

$

 

14,386

 

 

$

 

12,476

 

 

$

 

(13,564

)

 

+ 15.3

%

 

+ 206.1

%

Net Income (Loss)

 

$

 

8,559

 

 

$

 

7,408

 

 

$

 

(20,223

)

 

+ 15.5

%

 

+ 142.3

%

Net Income (Loss) per share – Basic

 

$

 

0.06

 

 

$

 

0.06

 

 

$

 

(0.16

)

 

 

 

+ $0.22

Net Income (Loss) per share – Diluted

 

$

 

0.06

 

 

$

 

0.05

 

 

$

 

(0.16

)

 

+ $0.01

 

+ $0.22

 

 

Non-GAAP* Quarterly Financial Results

 

 

Q2 2019

 

Q1 2019

 

Q2 2018

 

Q/Q

 

Y/Y

Revenue

 

$

 

102,296

 

 

$

 

98,091

 

 

$

 

102,715

 

 

+ 4.3

%

 

(0.4

%)

Gross Margin %

 

 

59.0

%

 

 

58.6

%

 

 

57.2

%

 

+ 40 bps

 

+ 180 bps

R&D Expense %

 

 

17.7

%

 

 

18.9

%

 

 

19.7

%

 

(120) bps

 

(200) bps

SG&A Expense %

 

 

17.0

%

 

 

18.8

%

 

 

19.2

%

 

(180) bps

 

(220) bps

Operating Expense

 

$

 

35,494

 

 

$

 

37,985

 

 

$

 

39,945

 

 

(6.6

%)

 

(11.1

%)

Operating Income

 

$

 

24,871

 

 

$

 

19,531

 

 

$

 

18,776

 

 

+ 27.3

%

 

+ 32.5

%

Net Income

 

$

 

21,087

 

 

$

 

14,561

 

 

$

 

12,375

 

 

+ 44.8

%

 

+ 70.4

%

Net Income per share – Basic

 

$

 

0.16

 

 

$

 

0.11

 

 

$

 

0.10

 

 

+ $0.05

 

+ $0.06

Net Income per share – Diluted

 

$

 

0.15

 

 

$

 

0.11

 

 

$

 

0.10

 

 

+ $0.04

 

+ $0.05

* GAAP represents U.S. Generally Accepted Accounting Principles. Non-GAAP represents GAAP excluding the impact of certain activities which the Company’s management excludes in analyzing the Company’s operating results and in understanding trends in the Company’s earnings. For a reconciliation of GAAP to non-GAAP results, see accompanying tables “Reconciliation of U.S. GAAP to Non-GAAP Financial Measures.”

Second Quarter 2019 Highlights

  • Improved Profitability: Achieved a 142% increase in net income on a GAAP basis in Q2 2019 compared to Q2 2018, and a 70% increase in net income on a non-GAAP basis in Q2 2019 compared to Q2 2018.
  • Debt Refinance and De-lever: Made $40 million in discretionary debt payments, reduced leverage ratio below 2, and successfully refinanced corporate debt, which lowered the interest rate by 275 basis points, extended the maturity by 3 years to 2024.
  • Launched New Platform Security Product: The MachXO3D™ FPGA simplifies the implementation of robust, comprehensive and flexible hardware-based security. MachXO3D can protect, detect and recover itself and other components from unauthorized firmware access at every stage of a system’s lifecycle, from the point of manufacturing all the way to the system’s end of life.
  • Higher Performance AI: Announced major performance and design flow enhancements for Lattice’s award-winning sensAI™ solutions stack. The Lattice sensAI stack provides a comprehensive hardware and software solution for implementing low power, always-on artificial intelligence (AI) functionality in smart devices operating at the Edge. sensAI was awarded the EDN Hot 100 Product Award, Tools & Development Category, the AI Breakthrough Award, Best AI-Based Solution for Engineering, and the Electronics Industry Award, Internet of Things Product of the Year, among others.
  • New Reference Design for Video Applications: Announced availability of the latest in a series of new reference designs featuring the popular Lattice CrossLink™ FPGA for video bridging applications. The MIPI DSI/CSI-2 to OpenLDI LVDS Interface Bridge reference design provides industrial device customers with a flexible and easy to implement solution to connect today’s more advanced application processors to the displays used in many of today’s industrial environments.

Business Outlook – Third Quarter of 2019:

  • Revenue for the third quarter of 2019 is expected to be between $101 million and $105 million.
  • Gross margin percentage for the third quarter of 2019 is expected to be 59% plus or minus 1% on a non-GAAP basis.
  • Total operating expenses for the third quarter of 2019 are expected to be between $35.5 million and $36.5 million on a non-GAAP basis.

Non-GAAP Financial Measures: In addition to financial measures prepared in accordance with generally accepted accounting principles (GAAP), this earnings release makes reference to non-GAAP measures. With respect to the outlook for the third quarter of 2019, certain items that affect GAAP measurement of financial metrics are out of the Company’s control and/or cannot be reasonably predicted. Consequently, the Company is unable to provide a reasonable estimate of GAAP measurement for guidance or a corresponding reconciliation to GAAP for the quarter. Additional information regarding the reasons the Company uses non-GAAP measures, a reconciliation of these measures to the most directly comparable GAAP measures, and other information relating to these measures are included below, following the GAAP financial information.

Investor Conference Call / Webcast Details:

Lattice Semiconductor will review the Company’s financial results for the fiscal second quarter and business outlook on Tuesday, July 30 at 5:00 p.m. Eastern Time. The dial-in number for the live audio call is 1-888-684-5603 or 1-918-398-4852 with conference identification number 8176926. A live webcast of the conference call will also be available on the investor relations section of www.latticesemi.com. The Company’s financial guidance will be limited to the comments on its public quarterly earnings call and the public business outlook statements contained in this press release.

Forward-Looking Statements Notice:

The foregoing paragraphs contain forward-looking statements that involve estimates, assumptions, risks and uncertainties. Any statements about our expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. Such forward-looking statements include statements relating to: our belief that we will unlock additional value for the Company and its shareholders; and the statements under the heading “Business Outlook – Third Quarter of 2019.” Other forward-looking statements may be indicated by words such as “will,” “could,” “should,” “would,” “may,” “expect,” “plan,” “project,” “anticipate,” “intend,” “forecast,” “future,” “believe,” “estimate,” “predict,” “propose,” “potential,” “continue” or the negative of these terms or other comparable terminology.

Estimates of future revenue are inherently uncertain due to such factors such as global economic conditions which may affect customer demand, pricing pressures, competitive actions, and international trade disputes and sanctions. Actual gross margin percentage and operating expenses could vary from the estimates on the basis of, among other things, changes in revenue levels, changes in product pricing and mix, changes in wafer, assembly, test and other costs, variations in manufacturing yields, the failure to sustain operational improvements, and the actual amount of compensation charges due to stock price changes. Actual results are subject to risks and uncertainties that relate more broadly to our overall business, including those risks more fully described in Lattice’s filings with the SEC including its Annual Report on Form 10-K for the fiscal year ended December 29, 2018, and Lattice’s quarterly reports filed on Form 10-Q. Lattice believes these and other risks and uncertainties could cause actual results to differ materially from the forward-looking statements. You should not unduly rely on forward-looking statements because actual results could differ materially from those expressed in any forward-looking statements. In addition, any forward-looking statement applies only as of the date on which it is made. The Company does not intend to update or revise any forward-looking statements, whether as a result of events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Non-GAAP Financial Measures:

Included within this press release and the accompanying tables and notes are certain non-GAAP financial measures that supplement the Company’s consolidated financial information prepared in accordance with U.S. GAAP. The non-GAAP measures presented exclude charges and adjustments primarily related to stock-based compensation, restructuring plans and related charges, acquisition-related charges, amortization and impairment of acquired intangible assets, inventory adjustments related to restructured operations, and the estimated tax effect of these items. These charges and adjustments are a result of periodic or non-core operating activities of the Company. The Company describes these non-GAAP financial measures and reconciles them to the most directly comparable GAAP measures in the tables and notes attached to this press release.

The Company’s management believes that these non-GAAP financial measures provide an additional and useful way of viewing aspects of our performance that, when viewed in conjunction with our GAAP results, provide a more comprehensive understanding of the various factors and trends affecting our ongoing financial performance and operating results than GAAP measures alone. Management also uses these non-GAAP measures for strategic and business decision-making, internal budgeting, forecasting, and resource allocation processes and believes that investors should have access to similar data.

These non-GAAP measures are included solely for informational and comparative purposes and are not meant as a substitute for GAAP and should be considered together with the consolidated financial information located in the tables attached to this press release.

About Lattice Semiconductor Corporation:

Lattice Semiconductor (NASDAQ: LSCC) is a leader in low power, small form factor programmable logic devices. Our FPGAs deliver intelligence, connectivity, and control solutions to the industrial, compute, communications, consumer, and automotive markets. Our unwavering commitment to our global customers enables them to accelerate their innovation, creating an even better and more connected world.

For more information about Lattice, please visit www.latticesemi.com. You can also follow us via LinkedIn, Twitter, Facebook, YouTube, WeChat, Weibo or Youku.

Lattice Semiconductor Corporation

Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)

 

 

Three Months Ended

 

Six Months Ended

 

 

June 29,

2019

 

March 30,

2019

 

June 30,

2018

 

June 29,

2019

 

June 30,

2018

Revenue

 

$

 

102,296

 

 

$

 

98,091

 

 

$

 

102,715

 

 

$

 

200,387

 

 

$

 

201,338

 

Cost of sales

 

 

42,258

 

 

 

40,439

 

 

 

52,467

 

 

 

82,697

 

 

 

94,569

 

Gross margin

 

 

60,038

 

 

 

57,652

 

 

 

50,248

 

 

 

117,690

 

 

 

106,769

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

19,377

 

 

 

19,665

 

 

 

21,081

 

 

 

39,042

 

 

 

44,022

 

Selling, general, and administrative

 

 

19,759

 

 

 

20,781

 

 

 

21,068

 

 

 

40,540

 

 

 

48,111

 

Amortization of acquired intangible assets

 

 

3,390

 

 

 

3,389

 

 

 

4,523

 

 

 

6,779

 

 

 

10,159

 

Restructuring

 

 

3,126

 

 

 

1,341

 

 

 

4,376

 

 

 

4,467

 

 

 

5,405

 

Acquisition related charges

 

 

 

 

 

 

864

 

 

 

 

 

1,531

 

Impairment of acquired intangible assets

 

 

 

 

 

 

11,900

 

 

 

 

 

11,900

 

Total operating expenses

 

 

45,652

 

 

 

45,176

 

 

 

63,812

 

 

 

90,828

 

 

 

121,128

 

Income (loss) from operations

 

 

14,386

 

 

 

12,476

 

 

 

(13,564

)

 

 

26,862

 

 

 

(14,359

)

Interest expense

 

 

(3,538

)

 

 

(4,987

)

 

 

(4,968

)

 

 

(8,525

)

 

 

(10,082

)

Other (expense) income, net

 

 

(2,109

)

 

 

153

 

 

 

(348

)

 

 

(1,956

)

 

 

206

 

Income (loss) before income taxes

 

 

8,739

 

 

 

7,642

 

 

 

(18,880

)

 

 

16,381

 

 

 

(24,235

)

Income tax expense

 

 

180

 

 

 

234

 

 

 

1,343

 

 

 

414

 

 

 

1,940

 

Net income (loss)

 

$

 

8,559

 

 

$

 

7,408

 

 

$

 

(20,223

)

 

$

 

15,967

 

 

$

 

(26,175

)

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share:

 

 

 

 

 

 

 

 

 

 

Basic

 

$

 

0.06

 

 

$

 

0.06

 

 

$

 

(0.16

)

 

$

 

0.12

 

 

$

 

(0.21

)

Diluted

 

$

 

0.06

 

 

$

 

0.05

 

 

$

 

(0.16

)

 

$

 

0.12

 

 

$

 

(0.21

)

 

 

 

 

 

 

 

 

 

 

 

Shares used in per share calculations:

 

 

 

 

 

 

 

 

 

 

Basic

 

 

132,206

 

 

 

130,992

 

 

 

124,843

 

 

 

131,599

 

 

 

124,460

 

Diluted

 

 

137,221

 

 

 

134,810

 

 

 

124,843

 

 

 

136,133

 

 

 

124,460

 

Lattice Semiconductor Corporation

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

 

 

June 29,

2019

 

December 29,

2018

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

 

122,636

 

 

$

 

119,051

 

Short-term marketable securities

 

 

 

 

9,624

 

Accounts receivable, net

 

 

37,893

 

 

 

60,890

 

Inventories

 

 

64,964

 

 

 

67,096

 

Other current assets

 

 

30,752

 

 

 

27,762

 

Total current assets

 

 

256,245

 

 

 

284,423

 

 

 

 

 

 

Property and equipment, net

 

 

39,593

 

 

 

34,883

 

Operating lease right-of-use assets

 

 

26,092

 

 

 

Intangible assets, net

 

 

13,784

 

 

 

21,325

 

Goodwill

 

 

267,514

 

 

 

267,514

 

Deferred income taxes

 

 

227

 

 

 

215

 

Other long-term assets

 

 

13,204

 

 

 

15,327

 

 

 

$

 

616,659

 

 

$

 

623,687

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable and other accrued liabilities

 

$

 

61,123

 

 

$

 

61,128

 

Current portion of long-term debt

 

 

17,190

 

 

 

8,290

 

Current portion of operating lease liabilities

 

 

4,804

 

 

 

Total current liabilities

 

 

83,117

 

 

 

69,418

 

 

 

 

 

 

Long-term debt, net of current portion

 

 

172,287

 

 

 

251,357

 

Long-term operating lease liabilities, net of current portion

 

 

23,792

 

 

 

Other long-term liabilities

 

 

42,286

 

 

 

44,455

 

Total liabilities

 

 

321,482

 

 

 

365,230

 

 

 

 

 

 

Stockholders’ equity

 

 

295,177

 

 

 

258,457

 

 

 

$

 

616,659

 

 

$

 

623,687

 

Lattice Semiconductor Corporation

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

Six Months Ended

 

June 29,

2019

 

June 30,

2018

Cash flows from operating activities:

 

 

 

Net income (loss)

$

 

15,967

 

 

$

 

(26,175

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

Depreciation and amortization

 

16,450

 

 

 

22,425

 

Impairment of acquired intangible assets

 

 

 

11,900

 

Stock-based compensation expense

 

7,655

 

 

 

7,200

 

Other non-cash adjustments

 

7,295

 

 

 

928

 

Net changes in assets and liabilities

 

19,129

 

 

 

(6,696

)

Net cash provided by operating activities

 

66,496

 

 

 

9,582

 

Cash flows from investing activities:

 

 

 

Capital expenditures

 

(8,459

)

 

 

(4,105

)

Other investing activities

 

6,058

 

 

 

(11,084

)

Net cash used in investing activities

 

(2,401

)

 

 

(15,189

)

Cash flows from financing activities:

 

 

 

Proceeds from issuance of long-term debt

 

206,500

 

 

 

Cash paid for debt issuance costs

 

(2,086

)

 

 

Repayment of long-term debt

 

(278,033

)

 

 

(12,009

)

Net cash flows related to stock compensation exercises

 

13,023

 

 

 

5,040

 

Net cash used in financing activities

 

(60,596

)

 

 

(6,969

)

Effect of exchange rate change on cash

 

86

 

 

 

(540

)

Net increase (decrease) in cash and cash equivalents

 

3,585

 

 

 

(13,116

)

Beginning cash and cash equivalents

 

119,051

 

 

 

106,815

 

Ending cash and cash equivalents

$

 

122,636

 

 

$

 

93,699

 

 

 

 

 

Supplemental disclosure of cash flow information and non-cash

investing and financing activities:

Interest paid

$

 

8,103

 

 

$

 

9,177

 

Income taxes paid, net of refunds

$

 

1,500

 

 

$

 

2,057

 

Lattice Semiconductor Corporation

Supplemental Historical Financial Information

(unaudited)

 

Three Months Ended

 

June 29,

2019

 

March 30,

2019

 

June 30,

2018

Balance Sheet Information

 

 

 

 

 

A/R Days Revenue Outstanding (DSO)

34

 

52

 

68

Inventory Days (DIO)

140

 

151

 

114

 

 

 

 

 

 

Revenue% (by Geography)

 

 

 

 

 

Asia

75%

 

70%

 

76%

Europe (incl. Africa)

12%

 

12%

 

12%

Americas

13%

 

18%

 

12%

 

 

 

 

 

 

Revenue% (by End Market)

 

 

 

 

 

Communications and Computing

39%

 

36%

 

29%

Industrial and Automotive

38%

 

37%

 

43%

Consumer

19%

 

20%

 

24%

Licensing and Services

4%

 

7%

 

4%

 

 

 

 

 

 

Revenue% (by Channel)

 

 

 

 

 

Distribution

85%

 

79%

 

86%

Direct

15%

 

21%

 

14%

Lattice Semiconductor Corporation

Reconciliation of U.S. GAAP to Non-GAAP Financial Measures

(in thousands, except per share data)

(unaudited)

 

 

 

Three Months Ended

 

 

June 29, 2019

 

March 30, 2019

 

June 30, 2018

 

 

 

 

 

 

 

Gross Margin Reconciliation

GAAP Gross margin

 

$

 

 

60,038

 

 

$

 

 

57,652

 

 

$

 

 

50,248

 

Inventory adjustment related to restructured operations

 

 

 

 

(338

)

 

 

8,277

 

Stock-based compensation – gross margin

 

 

327

 

 

 

202

 

 

 

196

 

Non-GAAP Gross margin

 

$

 

 

60,365

 

 

$

 

 

57,516

 

 

$

 

 

58,721

 

 

Gross Margin % Reconciliation

GAAP Gross margin %

 

 

58.7

%

 

 

58.8

%

 

 

48.9

%

Cumulative effect of non-GAAP Gross Margin adjustments

 

 

0.3

%

 

 

(0.2

)%

 

 

8.3

%

Non-GAAP Gross margin %

 

 

59.0

%

 

 

58.6

%

 

 

57.2

%

 

Research and Development Expense % (R&D Expense %)

Reconciliation

GAAP R&D Expense %

 

 

18.9

%

 

 

20.0

%

 

 

20.5

%

Stock-based compensation – R&D

 

 

(1.2

)%

 

 

(1.1

)%

 

 

(0.8

)%

Non-GAAP R&D Expense %

 

 

17.7

%

 

 

18.9

%

 

 

19.7

%

 

Selling, General, and Administrative Expense % (SG&A

Expense %) Reconciliation

GAAP SG&A Expense %

 

 

19.3

%

 

 

21.2

%

 

 

20.5

%

Stock-based compensation – SG&A

 

 

(2.3

)%

 

 

(2.4

)%

 

 

(1.3

)%

Non-GAAP SG&A Expense %

 

 

17.0

%

 

 

18.8

%

 

 

19.2

%

 

Operating Expenses Reconciliation

GAAP Operating expenses

 

$

 

 

45,652

 

 

$

 

 

45,176

 

 

$

 

 

63,812

 

Amortization of acquired intangible assets

 

 

(3,390

)

 

 

(3,389

)

 

 

(4,523

)

Restructuring charges

 

 

(3,126

)

 

 

(1,341

)

 

 

(4,376

)

Acquisition related charges (1)

 

 

 

 

 

 

(864

)

Impairment of acquired intangible assets

 

 

 

 

1,023

 

 

 

(11,900

)

Stock-based compensation – operations

 

 

(3,642

)

 

 

(3,484

)

 

 

(2,204

)

Non-GAAP Operating expenses

 

$

 

 

35,494

 

 

$

 

 

37,985

 

 

$

 

 

39,945

 

 

Income (Loss) from Operations Reconciliation

GAAP Income (loss) from operations

 

$

 

 

14,386

 

 

$

 

 

12,476

 

 

$

 

 

(13,564

)

Inventory adjustment related to restructured operations

 

 

 

 

(338

)

 

 

8,277

 

Stock-based compensation – gross margin

 

 

327

 

 

 

202

 

 

 

196

 

Amortization of acquired intangible assets

 

 

3,390

 

 

 

3,389

 

 

 

4,523

 

Restructuring charges

 

 

3,126

 

 

 

1,341

 

 

 

4,376

 

Acquisition related charges (1)

 

 

 

 

 

 

864

 

Impairment of acquired intangible assets

 

 

 

 

(1,023

)

 

 

11,900

 

Stock-based compensation – operations

 

 

3,642

 

 

 

3,484

 

 

 

2,204

 

Non-GAAP Income from operations

 

$

 

 

24,871

 

 

$

 

 

19,531

 

 

$

 

 

18,776

 

 

 

 

 

 

 

 

Income (Loss) from Operations % Reconciliation

GAAP Income (loss) from operations %

 

 

14.1

%

 

 

12.7

%

 

 

(13.2

)%

Cumulative effect of non-GAAP Gross Margin and Operating

adjustments

 

 

10.2

%

 

 

7.2

%

 

 

31.5

%

Non-GAAP Income from operations %

 

 

24.3

%

 

 

19.9

%

 

 

18.3

%

 

 

 

 

 

 

 

(1) Legal fees and outside services that were related to our proposed acquisition by Canyon Bridge Acquisition Company, Inc.

Lattice Semiconductor Corporation

Reconciliation of U.S. GAAP to Non-GAAP Financial Measures

(in thousands, except per share data)

(unaudited)

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

June 29, 2019

 

March 30, 2019

 

June 30, 2018

 

Other (Expense) Income, Net Reconciliation

GAAP Other (expense) income, net

 

$

 

(2,109

)

 

$

 

153

 

 

$

 

(348

)

Loss on re-financing of long-term debt

 

 

2,235

 

 

 

 

 

Non-GAAP Other income (expense), net

 

$

 

126

 

 

$

 

153

 

 

$

 

(348

)

 

Income Tax Expense Reconciliation

GAAP Income tax expense

 

$

 

180

 

 

$

 

234

 

 

$

 

1,343

 

Estimated tax effect of non-GAAP adjustments (2)

 

 

192

 

 

 

(98

)

 

 

(258

)

Non-GAAP Income tax expense

 

$

 

372

 

 

$

 

136

 

 

$

 

1,085

 

 

Net Income (Loss) Reconciliation

GAAP Net income (loss)

 

$

 

8,559

 

 

$

 

7,408

 

 

$

 

(20,223

)

Inventory adjustment related to restructured operations

 

 

 

 

(338

)

 

 

8,277

 

Stock-based compensation – gross margin

 

 

327

 

 

 

202

 

 

 

196

 

Amortization of acquired intangible assets

 

 

3,390

 

 

 

3,389

 

 

 

4,523

 

Restructuring charges

 

 

3,126

 

 

 

1,341

 

 

 

4,376

 

Acquisition related charges (1)

 

 

 

 

 

 

864

 

Impairment of acquired intangible assets

 

 

 

 

(1,023

)

 

 

11,900

 

Stock-based compensation – operations

 

 

3,642

 

 

 

3,484

 

 

 

2,204

 

Loss on re-financing of long-term debt

 

 

2,235

 

 

 

 

 

Estimated tax effect of non-GAAP adjustments (2)

 

 

(192

)

 

 

98

 

 

 

258

 

Non-GAAP Net income

 

$

 

21,087

 

 

$

 

14,561

 

 

$

 

12,375

 

 

Net Income (Loss) Per Share Reconciliation

GAAP Net income (loss) per share – basic

 

$

 

0.06

 

 

$

 

0.06

 

 

$

 

(0.16

)

Cumulative effect of Non-GAAP adjustments

 

 

0.10

 

 

 

0.05

 

 

 

0.26

 

Non-GAAP Net income per share – basic

 

$

 

0.16

 

 

$

 

0.11

 

 

$

 

0.10

 

 

 

 

 

 

 

 

GAAP Net income (loss) per share – diluted

 

$

 

0.06

 

 

$

 

0.05

 

 

$

 

(0.16

)

Cumulative effect of Non-GAAP adjustments

 

 

0.09

 

 

 

0.06

 

 

 

0.26

 

Non-GAAP Net income per share – diluted

 

$

 

0.15

 

 

$

 

0.11

 

 

$

 

0.10

 

 

 

 

 

 

 

 

Shares used in per share calculations:

 

 

 

 

 

 

Basic

 

 

132,206

 

 

 

130,992

 

 

 

124,843

 

Diluted – GAAP (3)

 

 

137,221

 

 

 

134,810

 

 

 

124,843

 

Diluted – Non-GAAP (3)

 

 

137,221

 

 

 

134,810

 

 

 

125,620

 

 

(1) Legal fees and outside services that were related to our proposed acquisition by Canyon Bridge Acquisition Company, Inc.

(2) We calculate non-GAAP tax expense by applying our tax provision model to year-to-date and projected income after adjusting

for non-GAAP items. The difference between calculated values for GAAP and non-GAAP tax expense has been included as

the “Estimated tax effect of non-GAAP adjustments.”

(3) Diluted shares are calculated using the GAAP treasury stock method. In a loss position, diluted shares equal basic shares.