Entropic Reports Fourth Quarter And Fiscal Year 2013 Results
The following excerpt is from the company's SEC filing
SAN DIEGO, February 5, 2014 - Entropic (NASDAQ: ENTR), a world leader in semiconductor solutions for the connected home, today reported its fourth quarter and fiscal year results for the period ended December 31, 2013. Entropic reported fourth quarter net revenues of $57.9 million, up 3% compared with $56.4 million in the third quarter of 2013.
In accordance with U.S. generally accepted accounting principles (GAAP), the Company's fourth quarter net loss was $11.9 million, or $0.13 per share (basic and diluted). This compares with GAAP net loss of $11.9 million, or $0.13 per share (basic and diluted) in the third quarter of 2013.
Non-GAAP net loss in the fourth quarter was $5.6 million, or $0.06 per share (diluted), compared to non-GAAP net loss of $5.6 million, or $0.06 per share (diluted) in the third quarter of 2013.
Net revenues for the year ended December 31, 2013 were $259.4 million, a decrease of 19% from the $321.7 million reported for the year ended December 31, 2012. Net loss computed in accordance with GAAP for the year ended December 31, 2013 was $66.2 million, or $0.73 per share (basic and diluted), compared with GAAP net income of $4.5 million, or $0.05 per share (diluted), for the year ended December 31, 2012.
Non-GAAP net loss for the year ended ended December 31, 2013 was $10.4 million, or $0.11 per share (diluted), compared to non-GAAP net income of $33.8 million, or $0.37 per share (diluted) for the year ended December 31, 2012.
“The fourth quarter played out largely as expected,” said Patrick Henry, president and chief executive officer, Entropic. “In 2014, we remain keenly focused on successfully executing the transformation of the Company and ramping our pipeline of design-wins to drive long-term growth for our shareholders.”
Three Months Ended Years Ended(In millions, except per share data) December 31, 2013 September 30, 2013 December 31, 2012 December 31, 2013 December 31, 2012Net revenues $57.9 $56.4 $89.7 $259.4 $321.7GAAP net (loss) income $(11.9) $(11.9) $— $(66.2) $4.5GAAP net (loss) income per share (basic and diluted) $(0.13) $(0.13) $0.00 $(0.73) $0.05Non-GAAP net (loss) income1 $(5.6) $(5.6) $7.6 $(10.4) $33.8Non-GAAP net (loss) income per share1 (diluted) $(0.06) $(0.06) $0.08 $(0.11) $0.37
1. Please refer to “Non-GAAP Financial Measures” below and the financial statements portion of this press release for an explanation of the non-GAAP financial measures contained in the table above and a reconciliation of such measures to the comparable GAAP financial measures.
Entropic management will be holding a conference call today, February 5, 2014 at 1:30 p.m. Pacific Time/4:30 p.m. Eastern Time to discuss the Company's results for the fourth quarter of fiscal 2013, and to provide guidance for the first quarter of 2014. You may access the conference call via any of the following:
Entropic™ (Nasdaq:ENTR) is a world leader in semiconductor solutions for the connected home. The Company transforms how traditional HDTV broadcast and IP-based streaming video content is seamlessly, reliably, and securely delivered, processed, and distributed into and throughout the home. Entropic's next-generation Set-top Box (STB) System-on-a-Chip (SoC) and Connectivity solutions enable Pay-TV operators to offer consumers more captivating whole-home entertainment experiences by transforming the way digital entertainment is delivered, connected and consumed - in the home and on the go. For more information, please visit Entropic at: www.entropic.com, read our blog Entropic Topics, or get social with us at @Entropic_News, or on Facebook, Google+, YouTube and LinkedIn
This press release and the accompanying tables contain the following non-GAAP financial measures: net income and net income per share. These non-GAAP financial measures exclude the effects on the Statement of Operations of all forms of stock-based compensation, transaction and integration costs related to the Trident Microsystems, PLX Technology and Mobius Semiconductor transactions, amortization of intangible assets, the loss related to equity method investment, the impairment of investment, the impact of fair value adjustments related to contingent consideration payable in the acquisition of PLX Technology assets, deferred tax asset valuation allowance, the cash tax difference and the restructuring charge.
Management uses these non-GAAP financial measures to manage the Company's business, including setting operating budgets and executive compensation plans. These non-GAAP measures are also used to (i) supplement the financial results and forecasts reported to the Company's board of directors, (ii) evaluate the Company's operating performance, (iii) compare the Company's performance to internal forecasts, and (iv) manage the Company's business and benchmarking performance internally. The non-GAAP measures have been made available to stockholders consistently in the past to provide transparency on how management manages the Company's operating performance. Management believes that these non-GAAP operating measures are useful to investors, when used as a supplement to GAAP measures, in evaluating the Company's ongoing operational performance.
The non-GAAP financial measures disclosed by the Company should not be considered in isolation or a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations to those financial statements should be carefully evaluated. The non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies.
Copyright © 2014 Entropic. All rights reserved. All other product or company names mentioned are used for identification purposes only and may be trademarks of their respective owners.
Three Months Ended Year Ended December 31, 2013 September 30, 2013 December 31, 2012 December 31, 2013 December 31, 2012 (unaudited) (unaudited) (unaudited) Net revenues$57,931 $56,376 $89,698 $259,376 $321,678Cost of net revenues30,137 28,863 45,789 134,974 157,675Gross profit27,794 27,513 43,909 124,402 164,003Operating expenses: Research and development29,622 28,510 29,139 114,536 98,353Sales and marketing6,273 6,137 6,327 24,882 25,313General and administrative5,125 5,751 5,882 22,415 25,474Amortization of intangibles444 443 930 2,312 2,575Restructuring charges— (69) 897 1,694 897Total operating expenses41,464 40,772 43,175 165,839 152,612(Loss) income from operations(13,670) (13,259) 734 (41,437) 11,391Loss related to equity method investment— — (779) (1,115) (3,315)Impairment of investment— — — (4,780) —Other income, net435 464 34 1,582 601(Loss) income before income taxes(13,235) (12,795) (11) (45,750) 8,677Income tax (benefit) provision(1,333) (860) (57) 20,404 4,157Net (loss) income$(11,902) $(11,935) $46 $(66,154) $4,520 Net (loss) income per share - basic and diluted$(0.13) $(0.13) $0.00 $(0.73) $0.05Weighted average number of shares used to compute net (loss) income per share - basic91,293 91,069 88,912 90,494 88,164Weighted average number of shares used to compute net (loss) income per share - diluted91,293 91,069 91,710 90,494 90,364
December 31, 2013 September 30, 2013 December 31, 2012 (unaudited) ASSETS Current assets: Cash and cash equivalents$16,298 $27,901 $17,206Marketable securities71,922 59,549 79,981Accounts receivable30,204 40,797 41,847Inventory13,503 15,116 26,395Deferred tax assets, current51 13 7,157Prepaid expenses and other current assets18,739 17,405 11,988Total current assets150,717 160,781 184,574Property and equipment, net17,994 17,928 17,629Long-term marketable securities69,534 73,894 71,748Intangible assets, net47,326 50,487 46,997Deferred tax assets, long-term— — 19,255Goodwill4,688 4,688 4,664Other long-term assets5,001 6,356 8,683Total assets$295,260 $314,134 $353,550LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable$8,601 $14,956 $11,380Accrued expenses and other current liabilities6,318 7,158 8,067Accrued payroll and benefits7,077 8,156 9,474Total current liabilities21,996 30,270 28,921Deferred rent1,751 2,178 683Other long-term liabilities1,688 1,586 1,281Stockholders' equity269,825 280,100 322,665Total liabilities and stockholders' equity$295,260 $314,134 $353,550
This press release contains the following non-GAAP financial measures: net income and net income per share. The presentation of such measures is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. Our non-GAAP net income and net income per share exclude the items listed below.
The following table sets forth such non-GAAP measures for the applicable periods as well as the reconciliation of such measures to the directly comparable GAAP measures for the periods shown. Three Months Ended Year Ended December 31, 2013 September 30, 2013 December 31, 2012 December 31, 2013 December 31, 2012 (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)GAAP net (loss) income$(11,902) $(11,935) $46 $(66,154) $4,520Non-GAAP adjustments: Stock-based compensation: Cost of net revenues203 227 261 861 828Research and development3,099 2,766 1,874 9,829 7,428Sales and marketing561 510 609 1,885 2,288General and administrative1,090 1,089 1,091 4,199 4,273Total stock-based compensation4,953 4,592 3,835 16,774 14,817Amortization of intangible assets: Cost of net revenues2,717 2,425 2,025 9,598 5,827Operating expenses444 443 930 2,312 2,575Transaction and integration costs— — 61 244 4,545Loss related to equity method investment— — 779 1,115 3,315Impairment of investment— — — 4,780 —Adjustments to the fair value of PLX acquisition contingent consideration— — 201 (131) 431Income tax effects of pre-tax adjustments— — (3,055) — (11,342)Cash tax difference (1)(1,814) (1,093) 1,848 (7,278) 8,204Deferred tax asset valuation allowance— — — 26,695 —Restructuring charges (2)— (69) 897 1,694 897Total of non-GAAP adjustments6,300 6,298 7,521 55,803 29,269Non-GAAP net (loss) income$(5,602) $(5,637) $7,567 $(10,351) $33,789Weighted average shares (basic)91,293 91,069 88,912 90,494 88,164Adjustment for dilutive shares— — 2,798 — 2,200Weighted average shares (diluted)91,293 91,069 91,710 90,494 90,364GAAP net (loss) income per share (basic)$(0.13) $(0.13) $0.00 $(0.73) $0.05Non-GAAP adjustments detailed above0.07 0.07 0.08 0.62 0.32Non-GAAP net (loss) income per share (diluted)$(0.06) $(0.06) $0.08 $(0.11) $0.37
(1)The Company's non-GAAP net (loss) income per share is calculated using the cash tax rate of (9)%, (4)%, and 13% for the three month periods ended December 31, 2013, September 30, 2013, and December 31, 2012, respectively. The Company's non-GAAP net (loss) income per share is calculated using the cash tax rate of (11)% and 18% for the years ended December 31, 2013 and 2012, respectively. The estimated cash tax rate is the estimated tax payable on the Company's projected tax returns as a percentage of estimated annual non-GAAP pre-tax net income (loss). The Company uses an estimated cash tax rate to adjust for the historical variation in the effective book tax rate associated with the valuation allowance adjustments, the utilization of research and development tax credits, and the utilization of loss carryforwards which currently have an overall effect of reducing taxes payable. The Company believes that the cash tax rate provides a more transparent view of its operating results. The Company's effective tax rate used for the purposes of calculating GAAP net (loss) income for the three month periods ended December 31, 2013, September 30, 2013, and December 31, 2012 was approximately 10%, 7%, and (NM), respectively. The Company's effective tax rate used for the purposes of calculating GAAP net (loss) income for the years ended December 31, 2013 and 2012 was approximately (45)% and 48%, respectively.
(2)In June, 2013, we incurred a restructuring charge of $1.8 million pursuant to a plan to rebalance our operations in an attempt to leverage synergies from our acquisitions and refine our business operations. This plan resulted in a reduction of our personnel by 66 employees, or approximately 10% of our workforce. In November, 2012, we incurred a restructuring charge of $0.9 million pursuant to a plan to rebalance our operations in an attempt to leverage synergies from our acquisitions. This plan resulted in a reduction of our personnel by 40 employees or approximately 6% of our workforce.
The above information was disclosed in a filing to the SEC. To see this filing in its entirety, click here. Entropic Communications next reports earnings on February 05, 2014.
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