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Vitesse Semiconductor Corporation (NASDAQ: VTSS), a leading provider of
advanced IC solutions for Carrier and Enterprise networks, reported its
financial results for the fourth quarter and fiscal year 2012, ended
September 30, 2012.
“Vitesse achieved our goal of operating profitability in the fourth
quarter and for fiscal year 2012,” said Chris Gardner, CEO of Vitesse.
“In 2012, we demonstrated organizational agility in a tough market
environment and increased operating income by over $12 million compared
to 2011. We improved our financial leverage, reducing overall
year-over-year operating expenses by 27%, and increased our cash
position by nearly $7 million, or 38%. In addition, our continued
investment in R&D allowed us to dramatically scale our product feature
set and capabilities to meet evolving market needs. The introduction of
Vitesse’s patented VeriTime™ synchronization technology for 4G/LTE drove
growth in our new product portfolio and reinforced our product
leadership.
“In fiscal year 2012, Vitesse’s total new product revenue increased 111%
from fiscal year 2011. Looking ahead, these new products will drive our
growth. In the last two years, we captured over 600 design wins with an
estimated lifetime revenue of $500 million. Nearly 50 percent of our
design wins were in the new IP Edge market, particularly Mobile Access,
capturing multiple wins with nine of the market share leaders. We
continue to expect revenues from our new products to double from 2012 to
2013 and double again in 2014.”
Fourth Quarter Fiscal Year 2012 Financial Results Summary
Total net revenues were $29.5 million, compared to $30.3 million in
the third quarter of fiscal year 2012 and $30.3 million in the fourth
quarter of fiscal year 2011.
Product revenues were $28.1 million compared to $25.7 million in
the third quarter of fiscal year 2012 and $28.9 million in the
fourth quarter of fiscal year 2011.
The product lines contributed the following as a percentage of
product revenue as compared to the third quarter of fiscal year
2012:
Carrier networking products: 51.6% versus 45.1%
Enterprise networking products: 45.6% versus 52.6%
Core Carrier and Enterprise networking products: 97.2% versus
97.7%
Non-core products: 2.8% versus 2.3%
Intellectual property revenues totaled $1.4 million, compared to
$4.6 million in the third quarter of fiscal year 2012 and $1.5
million in the fourth quarter of fiscal year 2011.
Product margins were 55.9% compared to 56.2% in the third quarter of
fiscal year 2012 and 55.3% in the fourth quarter of fiscal year 2011.
Operating expenses were $16.6 million compared to $16.9 million in the
third quarter of fiscal year 2012 and $25.9 million in the fourth
quarter of fiscal year 2011. Included in operating expenses for the
fourth quarter of fiscal year 2012 and the fourth quarter of fiscal
year 2011 are restructuring and impairment charges of $1.5 million
credit and $3.1 million, respectively.
Operating income was $531,000 compared to operating income of $2.1
million in the third quarter of fiscal year 2012 and an operating loss
of $8.5 million in the fourth quarter of fiscal year 2011.
Non-GAAP operating income was $308,000 compared to $3.3 million in the
third quarter of fiscal year 2012 and non-GAAP operating loss of $4.7
million in the fourth quarter of fiscal year 2011.
Net income was $1.2 million, or $0.05 per basic and per fully diluted
share. This compares to net income of $4.7 million, or $0.18 per basic
and $0.16 per fully diluted share, in the third quarter of fiscal year
2012; and net loss of $4.6 million, or $0.19 per basic share and fully
diluted share, in the fourth quarter of fiscal year 2011.
Non-GAAP net loss was $130,000, or breakeven per basic and fully
diluted share, compared to non-GAAP net income of $140,000, or
breakeven per basic and fully diluted share, for the third quarter of
fiscal year 2012; and non-GAAP net loss of $6.0 million, or $0.25 per
basic and fully diluted share, in the fourth quarter of fiscal year
2011.
Fiscal Year 2012 Financial Results Summary
Total net revenues for fiscal year 2012 were $119.5 million, a
decrease of 15.2% compared with $141.0 million reported for fiscal
year 2011.
Product revenues were $109.9 million, a 17.2% decline from $132.7
million in fiscal year 2011.
The product lines contributed the following as a percent of fiscal
year 2012 product revenue as compared to the fiscal year 2011:
Carrier networking products: 43.4% versus 46.5%
Enterprise networking products: 49.0% versus 48.8%
Core Carrier and Enterprise networking products: 92.4% versus
95.3%
Non-core products: 7.6% versus 4.7%
Intellectual property revenues were $9.6 million, an increase of
16.3% compared with $8.2 million in fiscal year 2011.
Product margins were 57.8% in fiscal year 2012 compared to 59.6% in
the prior year.
Operating expenses were $71.4 million compared to $98.2 million in
fiscal year 2011. Included in operating expenses for fiscal year 2012
and fiscal year 2011 are restructuring and impairment charges of $1.4
million credit and $3.7 million, respectively.
Income from operations was $1.6 million compared with a loss from
operations of $10.9 million in fiscal year 2011.
Non-GAAP income from operations was $5.0 million compared with
non-GAAP loss from operations of $3.8 million in fiscal year 2011.
Net loss was $1.1 million, or $0.04 per share, in fiscal year 2012,
compared with a net loss of $14.8 million, or $0.61 per share, in
fiscal year 2011.
Non-GAAP net loss was $2.7 million, or $0.10 per share, in fiscal year
2012 compared with a non-GAAP net loss was $11.5 million, or $0.47 per
share, in fiscal year 2011.
Balance Sheet Data at September 30, 2012 as Compared to September 30,
2011
Cash balance increased to $23.9 million, compared to $17.3 million;
Accounts receivable totaled $9.4 million, compared to $9.6 million;
Inventory totaled $12.1 million, compared to $20.9 million; and
Working capital increased to $28.7 million, compared to $26.7 million.
Financial Outlook
For the first quarter of fiscal year 2013, ending December 31, 2012,
Vitesse expects revenues to be in the range of $25.0 million to $27.0
million and product margins are expected to be between 54% and 57%.
Operating expenses are expected to be between $18.0 million and $19.0
million.
The Company's long-term operating model, which assumes a
quarterly-revenue run rate of $43 million or more, and is stated as a
percentage of product revenue, targets:
Gross Margin:
57 to 62 percent
R&D Expense:
25 to 28 percent
SG&A Expense:
15 to 19 percent
Income from Operations:
12 to 18 percent
EBITDA:
15 to 21 percent
Inventory Turns:
5 times annually
Accounts Payable and Receivable:
In line with normal industry levels
The Company defines EBITDA as earnings before interest, taxes,
depreciation, and amortization. Management uses EBITDA measures
internally to evaluate the Company's operating performance before
charges that are considered by management to be outside of the Company's
core operating results. In addition, the measures are used for planning
and forecasting of the Company's future periods.
December 4, 2012 Conference Call Information
A conference call is scheduled for today, December 4, 2012, at 1:30 p.m.
Pacific Time / 4:30 p.m. Eastern Time to report financial results for
the fourth quarter and fiscal year 2012. To listen to the conference
call via telephone, dial 888.438.5535 (U.S. toll-free) or 719.457.1035
(International) and provide the passcode 8148011. Participants should
dial in at least 10 minutes prior to the start of the call. To listen
via the Internet, the webcast can be accessed through the investor
section of the Vitesse corporate web site at
investor.vitesse.com/events.cfm.
The playback of the conference call will be available approximately two
hours after the call concludes and will be accessible on the Vitesse
corporate web site or by calling 877.870.5176 (U.S. toll-free) or
858.384.5517 (International) and entering the passcode 8148011. The
audio replay will be available for seven days.
About Vitesse
Vitesse (NASDAQ: VTSS) designs a diverse portfolio of high-performance
semiconductor solutions for Carrier and Enterprise networks worldwide.
Vitesse products enable the fastest-growing network infrastructure
markets including Mobile Access/IP Edge, Cloud Computing and SMB/SME
Enterprise Networking. Visit www.vitesse.com
or follow us on Twitter @VitesseSemi.
Vitesse is a registered trademark and VeriTime is a trademark of Vitesse
Semiconductor Corporation in the United States and other jurisdictions.
All other trademarks or registered trademarks mentioned herein are the
property of their respective holders.
VTSS-F
Cautions Regarding Forward Looking Statements
All statements included or incorporated by reference in this release and
the related conference call for analysts and investors, other than
statements or characterizations of historical fact, are forward-looking
statements that are based on our current expectations, estimates and
projections about our business and industry, management’s beliefs, and
certain assumptions made by us, all of which are subject to change.
Forward-looking statements can often be identified by words such as
“anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,”
“predicts,” and similar terms, and variations or negatives of these
words. Examples of forward-looking statements in this release include
the Company’s financial outlook for its first fiscal quarter of 2013,
the Company’s long-term operating model, projected revenues from design
wins and anticipated revenue growth. Forward-looking statements are not
guarantees of future performance and the Company’s actual results may
differ significantly from the results discussed in the forward-looking
statements. Factors and uncertainties that could affect the Company’s
forward-looking statements include, among other things: identification
of feasible new product initiatives, management of R&D efforts and the
resulting successful development of new products and product platforms;
acceptance by customers of the Company’s products; reliance on key
suppliers; rapid technological change in the industries in which the
Company operates; and competitive factors, including pricing pressures
and the introduction by others of new products with similar or better
functionality than the Company’s products. These and other risks are
more fully described in the Company’s filings with the Securities and
Exchange Commission, including the Company’s most recently filed Annual
Report on Form 10-K and Quarterly Report on Form 10-Q, which should be
read in conjunction herewith for a further discussion of important
factors that could cause actual results to differ materially from those
in the forward-looking statements. The Company undertakes no obligation
to publicly update or revise any forward-looking statements, whether as
a result of new information, future events or otherwise.
Non-GAAP Measures
A non-GAAP financial measure is a numerical measure of a company’s
performance, financial position, or cash flows that either excludes or
includes amounts that are not normally excluded or included in the most
directly comparable measure calculated and presented in accordance with
GAAP. Non-GAAP measures are not in accordance with, nor are they a
substitute for, GAAP measures. Other companies may use different
non-GAAP measures and presentation of results.
We provide non-GAAP measures of non-GAAP income (loss) from operations
and non-GAAP net income (loss) as a supplement to financial results
based on GAAP income from operations and GAAP net income. The Company
believes that the additional non-GAAP measures are useful to investors
for the purpose of financial analysis. We believe the presentation of
non-GAAP measures provides investors with additional insight into
underlying operating results and prospects for the future by excluding
gains, losses and other charges that are considered by management to be
outside of the Company’s core operating results. Management uses these
measures internally to evaluate the Company’s in-period operating
performance before taking into account these non-operating gains, losses
and charges. In addition, the measures are used for planning and
forecasting of the Company’s performance in future periods.
In deriving non-GAAP income (loss) from operations from GAAP income
(loss) from operations, we exclude stock-based compensation charges,
amortization of intangible assets, as well as restructuring and
impairment charges. In deriving non-GAAP net income (loss) from GAAP net
income (loss), we further exclude gain or loss on the embedded
derivative and loss on extinguishment of debt. Stock-based compensation
charges, amortization of intangible assets, gain or loss on the embedded
derivative and loss on extinguishment of debt represent charges that
recur in amounts unrelated to the Company’s operations. Restructuring
and impairment costs relate to strategic initiatives that result in
short term increases in costs that end with the fulfillment of the
initiative and cost reductions in future periods.
The non-GAAP financial measures we provide have certain limitations
because they do not reflect all of the costs associated with the
operation of our business as determined in accordance with GAAP.
Non-GAAP income (loss) from operations and Non-GAAP net income (loss)
are in addition to, and are not a substitute for or superior to, income
(loss) from operations and net income (loss), which are prepared in
accordance with GAAP and may be different from non-GAAP measures used by
other companies. A detailed reconciliation of the non-GAAP measures to
the most directly comparable GAAP measure is set forth below. Investors
are encouraged to review these reconciliations to appropriately
incorporate the non-GAAP measures and the limitations of these measures
into their analyses. For complete information on stock-based
compensation, amortization of intangible assets, restructuring and
impairment charges, and the change in the fair value of our embedded
derivatives, please see our Form 10-K for the year ended September 30,
2012.
VITESSE SEMICONDUCTOR CORPORATION
CONSOLIDATED BALANCE SHEETS
September 30,
September 30,
2012
2011
(in thousands, except par value)
ASSETS
Current assets:
Cash
$
23,891
$
17,318
Accounts receivable, net
9,403
9,591
Inventory, net
12,060
20,857
Prepaid expenses and other current assets
2,125
2,443
Total current assets
47,479
50,209
Property, plant and equipment, net
3,832
5,934
Other intangible assets, net
1,175
1,781
Other assets
4,130
3,070
$
56,616
$
60,994
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable
$
5,726
$
5,198
Accrued expenses and other current liabilities
12,188
14,474
Deferred revenue
871
3,878
Total current liabilities
18,785
23,550
Other long-term liabilities
574
1,927
Long-term debt, net
15,852
15,444
Compound embedded derivative
2,899
7,796
Convertible subordinated debt, net
42,521
40,736
Total liabilities
80,631
89,453
Commitments and contingencies
Stockholders' deficit:
Preferred stock, $0.01 par value: 10,000 shares authorized; Series
B Non Cumulative, Convertible, 135 shares outstanding at
September 30, 2012 and 2011, respectively
1
1
Common stock, $0.01 par value: 250,000 shares authorized; 25,812
and 24,471 shares outstanding at September 30, 2012 and 2011,
respectively
258
245
Additional paid-in-capital
1,829,976
1,824,433
Accumulated deficit
(1,854,250
)
(1,853,138
)
Total stockholders' deficit
(24,015
)
(28,459
)
$
56,616
$
60,994
VITESSE SEMICONDUCTOR CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
Twelve Months ended
September 30,
September 30,
2012
2011
2012
2011
(in thousands, except per share data)
Net revenues:
Product revenues
$
28,053
$
28,887
$
109,920
$
132,742
Intellectual property revenues
1,415
1,453
9,563
8,225
Net revenues
29,468
30,340
119,483
140,967
Costs and expenses:
Cost of product revenues
12,379
12,898
46,407
53,674
Engineering, research and development
10,195
11,408
42,713
52,990
Selling, general and administrative
7,727
11,341
29,822
41,233
Restructuring and impairment
(1,460
)
3,102
(1,424
)
3,656
Amortization of intangible assets
96
61
330
348
Costs and expenses
28,937
38,810
117,848
151,901
Income (loss) from operations
531
(8,470
)
1,635
(10,934
)
Other expense (income) :
Interest expense, net
1,956
1,969
7,778
8,456
Gain on compound embedded derivative
(1,124
)
(5,189
)
(4,897
)
(7,680
)
Loss on extinguishment of debt
-
-
-
3,874
Other expense (income), net
19
(119
)
40
(153
)
Other expense (income), net
851
(3,339
)
2,921
4,497
Loss before income tax benefit
(320
)
(5,131
)
(1,286
)
(15,431
)
Income tax benefit
(1,537
)
(542
)
(174
)
(619
)
Net income (loss)
$
1,217
$
(4,589
)
$
(1,112
)
$
(14,812
)
Net income (loss) per common share:
Basic
$
0.05
$
(0.19
)
$
(0.04
)
$
(0.61
)
Diluted
$
0.05
$
(0.19
)
$
(0.04
)
$
(0.61
)
Weighted average shares outstanding:
Basic
25,628
24,463
25,121
24,315
Diluted
26,513
24,463
25,121
24,315
VITESSE SEMICONDUCTOR CORPORATION
UNAUDITED RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP
NET LOSS
Three Months Ended
Fiscal Year Ended
September 30,
September 30,
2012
2011
2012
2011
(in thousands, except per share data)
GAAP net income (loss)
$
1,217
$
(4,589
)
$
(1,112
)
$
(14,812
)
Adjustments:
Stock-based compensation charges
1,141
618
4,442
3,152
Amortization of intangible assets
96
61
330
348
Restructuring and impairment charges
(1,460
)
3,102
(1,424
)
3,656
Gain on compound embedded derivative
(1,124
)
(5,189
)
(4,897
)
(7,680
)
Loss on extinguishment of debt
-
-
-
3,874
Total GAAP to non-GAAP adjustments
(1,347
)
(1,408
)
(1,549
)
3,350
Non-GAAP net loss
$
(130
)
$
(5,997
)
$
(2,661
)
$
(11,462
)
Net income (loss) per common share
Basic:
GAAP net income (loss)
$
0.05
$
(0.19
)
$
(0.04
)
$
(0.61
)
Adjustments *
(0.05
)
(0.06
)
(0.06
)
0.14
Non-GAAP net income (loss)
$
-
$
(0.25
)
$
(0.10
)
$
(0.47
)
Diluted:
GAAP net income (loss)
$
0.05
$
(0.19
)
$
(0.04
)
$
(0.61
)
Adjustments *
(0.05
)
(0.06
)
(0.06
)
0.14
Non-GAAP net income (loss)
$
-
$
(0.25
)
$
(0.10
)
$
(0.47
)
UNAUDITED RECONCILIATION OF GAAP INCOME (LOSS) FROM OPERATIONS
TO NON-GAAP INCOME (LOSS) FROM OPERATIONS
GAAP income (loss) from operations
$
531
$
(8,470
)
$
1,635
$
(10,934
)
Adjustments:
Stock-based compensation charges
1,141
618
4,442
3,152
Amortization of intangible assets
96
61
330
348
Restructuring and impairment charges
(1,460
)
3,102
(1,424
)
3,656
Total GAAP to non-GAAP adjustments
(223
)
3,781
3,348
7,156
Non-GAAP income (loss) from operations
$
308
$
(4,689
)
$
4,983
$
(3,778
)
* Included in the adjustments are calculations required by the two class
method relative to participation rights of our preferred shares.
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SYS-CON Events announced today that OpenStack will exhibit at SYS-CON's 12th International Cloud Expo, which will take place on June 10–13, 2013, at the Javits Center in New York City, New York. OpenStack software controls large pools of compute, storage, and networking resources thro...
“Cloud has everything to do with what has happened with Big Data,” explained Jason Deck, Director of Strategic Alliances at Logicworks, in this exclusive Q&A with Cloud Expo Conference Chair Jeremy Geelan. “Big Data doesn’t exist in its easily accessible way without cloud. From reduced...
You're getting pitched every day from your legacy enterprise software and hardware vendors about "cloud." They're doing an amazing job of convincing your CIO and CTO about what cloud is and how you should use it. The reality is they're defending their shrinking market share and keeping...
In an ideal developer/systems administrator’s world, most applications would deploy seamlessly to multiple platforms and scale elastically with minimal effort bringing the unprecedented agility of the cloud within immediate reach of developer teams and IT organizations.
OpenStack, a ...
Cloud computing must have been brushing up on its bedside manner.
HIPAA requirements now stipulate everyone in the health-care industry must begin migrating patient records and other data to cloud computing. By 2015, all medical professionals with access to patient records must utiliz...
“Open source has always provided a number of benefits, including easing adoption costs, propagating a better understanding of the technology, and allowing for faster evolution and commercialization of products and services based on it,” noted Terry Woloszyn, Founder & CEO, Leeward Secu...
