Press Release
Ixia Announces Preliminary Financial Results for 2016 Fourth Quarter and Full Year
Total revenue for the 2016 fourth quarter was
"We achieved strong results in the fourth quarter with increased momentum for our network visibility solutions, and we expect earnings and revenue inline with our guidance. Revenue for our network visibility solutions grew 22% year-over-year, driven by increased demand in the enterprise. With our continued focus on operational excellence and financial discipline we generated strong cash flow from operations during the quarter, bringing our total for the year to
“As we announced earlier this month, we signed a definitive agreement to be acquired by
Total revenue for full year 2016 was
Additional non-GAAP information and GAAP to non-GAAP reconciliation information may be found in the attached financial tables. Certain supplemental financial information will be posted promptly to the website following the issuance of this press release.
Each quarter, the company evaluates the valuation allowance for its deferred tax assets and considers whether the valuation allowance is required to be adjusted so that the company records net deferred tax assets only to the extent the company has concluded that it is more likely than not that the net deferred tax assets will be realized. As part of completing its annual financial statements, the company continues to evaluate whether its U.S. deferred tax assets require an additional valuation allowance of up to
Non-GAAP Financial Measures
To supplement our consolidated financial results prepared in accordance with Generally Accepted Accounting Principles ("GAAP"), we have included certain non-GAAP financial measures in this press release. Specifically, we have provided non-GAAP net income and non-GAAP diluted earnings per share measures that, among other adjustments identified in the attached financial tables, exclude from the most directly comparable GAAP measures certain items such as expenses relating to internal investigations and any related remediation efforts, the securities class action, shareholder derivative action and
Safe Harbor under the Private Securities Litigation Reform Act of 1995
Certain statements made in this press release may be deemed to be forward-looking statements including, without limitation, statements regarding the company’s expectations regarding its financial results for the 2016 fourth quarter and full year, building momentum for our network visibility solutions, our continued focus on operational excellence and financial discipline, and expectations relating to our pending acquisition by
Important Additional Information and Where to Find It
Participants in the Solicitation
This document does not constitute a solicitation of proxy, an offer to purchase or a solicitation of an offer to sell any securities.
About
Learn more at www.ixiacom.com.
IXIA |
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Consolidated Balance Sheets |
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(in thousands) |
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(unaudited) | ||||||||
December 31, | ||||||||
2016 | 2015 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 71,759 | $ | 52,472 | ||||
Marketable securities | 71,251 | 14,504 | ||||||
Accounts receivable, net | 103,395 | 121,932 | ||||||
Inventories | 28,657 | 33,289 | ||||||
Prepaid expenses and other current assets | 29,711 | 44,384 | ||||||
Total current assets | 304,773 | 266,581 | ||||||
Property and equipment, net | 36,666 | 36,536 | ||||||
Intangible assets, net | 65,677 | 103,660 | ||||||
Goodwill | 338,873 | 338,873 | ||||||
Other assets | 48,485 | 34,227 | ||||||
Total assets | $ | 794,474 | $ | 779,877 | ||||
Liabilities and Shareholders’ Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 9,705 | $ | 15,346 | ||||
Accrued expenses and other | 39,402 | 70,029 | ||||||
Deferred revenues | 115,784 | 108,436 | ||||||
Term loan, net | 5,048 | 3,045 | ||||||
Total current liabilities | 169,939 | 196,856 | ||||||
Deferred revenues | 30,861 | 22,117 | ||||||
Other liabilities | 10,668 | 7,406 | ||||||
Term loan, net | 28,538 | 34,487 | ||||||
Total liabilities | 240,006 | 260,866 | ||||||
Shareholders’ equity: | ||||||||
Common stock, without par value; 200,000 shares authorized at December 31, 2016 and 2015; 82,604 and 80,805 shares issued and outstanding as of December 31, 2016 and 2015, respectively | 209,475 | 201,087 | ||||||
Additional paid-in capital | 243,356 | 225,432 | ||||||
Retained earnings | 102,545 | 93,525 | ||||||
Accumulated other comprehensive loss | (908 | ) | (1,033 | ) | ||||
Total shareholders’ equity | 554,468 | 519,011 | ||||||
Total liabilities and shareholders’ equity | $ | 794,474 | $ | 779,877 | ||||
IXIA |
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Condensed Consolidated Statements of Operations |
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(in thousands, except per share data) |
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(unaudited) | ||||||||||||||||
Three Months Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Revenues: | ||||||||||||||||
Products | $ | 81,721 | $ | 97,352 | $ | 311,203 | $ | 361,923 | ||||||||
Services | 46,442 | 41,126 | 173,642 | 155,014 | ||||||||||||
Total revenues | 128,163 | 138,478 | 484,845 | 516,937 | ||||||||||||
Costs and operating expenses: (1) | ||||||||||||||||
Cost of revenues – products (2) | 23,344 | 25,307 | 87,528 | 97,415 | ||||||||||||
Cost of revenues – services | 3,995 | 3,956 | 16,041 | 16,443 | ||||||||||||
Research and development | 25,015 | 29,520 | 102,534 | 113,443 | ||||||||||||
Sales and marketing | 43,580 | 41,331 | 161,604 | 155,211 | ||||||||||||
General and administrative | 14,104 | 14,651 | 58,975 | 68,925 | ||||||||||||
Amortization of intangible assets | 9,532 | 10,125 | 39,099 | 42,315 | ||||||||||||
Acquisition and other related costs | 807 | 10 | 785 | 656 | ||||||||||||
Restructuring | 251 | 10 | (130 | ) | (517 | ) | ||||||||||
Total costs and operating expenses | 120,628 | 124,910 | 466,436 | 493,891 | ||||||||||||
Income from operations | 7,535 | 13,568 | 18,409 | 23,046 | ||||||||||||
Interest income and other, net | (113 | ) | 220 | 310 | (372 | ) | ||||||||||
Interest expense | (473 | ) | (1,479 | ) | (1,930 | ) | (8,331 | ) | ||||||||
Income before income taxes | 6,949 | 12,309 | 16,789 | 14,343 | ||||||||||||
Income tax expense | 1,538 | 6,558 | 7,769 | 8,392 | ||||||||||||
Net income | $ | 5,411 | $ | 5,751 | $ | 9,020 | $ | 5,951 | ||||||||
Earnings per share: | ||||||||||||||||
Basic | $ | 0.07 | $ | 0.07 | $ | 0.11 | $ | 0.07 | ||||||||
Diluted | $ | 0.06 | $ | 0.07 | $ | 0.11 | $ | 0.07 | ||||||||
Weighted average number of common and common equivalent shares outstanding: | ||||||||||||||||
Basic | 82,123 | 80,511 | 81,470 | 79,633 | ||||||||||||
Diluted | 84,278 | 82,362 | 83,008 | 81,459 | ||||||||||||
(1) Stock-based compensation included in: | ||||||||||||||||
Cost of revenues – products | $ | 77 | $ | 82 | $ | 280 | $ | 315 | ||||||||
Cost of revenues – services | 30 | 31 | 108 | 120 | ||||||||||||
Research and development | 1,704 | 1,609 | 6,489 | 6,625 | ||||||||||||
Sales and marketing | 1,736 | 1,295 | 5,944 | 4,730 | ||||||||||||
General and administrative | 1,591 | 1,638 | 5,886 | 7,186 |
(2) |
Cost of revenues – products excludes amortization of intangible assets related to purchased technologies of $6.2 million and $6.4 million for the three months ended December 31, 2016 and 2015, respectively, and $25.3 million and $25.7 million for the years ended December 31, 2016 and 2015, respectively, which are included in Amortization of intangible assets. |
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IXIA |
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Non-GAAP Information and Reconciliation to Most Directly Comparable GAAP Financial Measures |
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(in thousands, except per share data) |
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(unaudited) | ||||||||
Three Months Ended | ||||||||
December 31, | ||||||||
2016 | 2015 | |||||||
GAAP net income | $ | 5,411 | $ | 5,751 | ||||
Adjustments: | ||||||||
Stock-based compensation (a) | 5,138 | 4,655 | ||||||
Amortization of intangible assets (b) | 9,532 | 10,125 | ||||||
Acquisition and other related costs (c) | 807 | 10 | ||||||
Restructuring (d) | 251 | 10 | ||||||
Investigations, shareholder litigation and related matters (e) | (346 | ) | (660 | ) | ||||
Income tax effect (f) | (3,134 | ) | (1,187 | ) | ||||
Non-GAAP net income | $ | 17,659 | $ | 18,704 | ||||
GAAP diluted income per share | $ | 0.06 | $ | 0.07 | ||||
Adjustments: | ||||||||
Stock-based compensation (a) | 0.06 | 0.06 | ||||||
Amortization of intangible assets (b) | 0.11 | 0.12 | ||||||
Acquisition and other related costs (c) | 0.01 | 0.00 | ||||||
Restructuring (d) | 0.00 | 0.00 | ||||||
Investigations, shareholder litigation and related matters (e) | 0.00 | (0.01 | ) | |||||
Income tax effect (f) | (0.03 | ) | (0.01 | ) | ||||
Convertible senior notes (g) | — | (0.01 | ) | |||||
Non-GAAP diluted earnings per share | $ | 0.21 | $ | 0.22 | ||||
Shares used in computing GAAP diluted earnings per common share | 84,278 | 82,362 | ||||||
Effect of reconciling item (g) | — | 5,677 | ||||||
Shares used in computing non-GAAP diluted earnings per common share | 84,278 | 88,039 | ||||||
(a) | This reconciling item represents stock-based compensation. As stock-based compensation represents a non-cash charge that is not directly attributable to the underlying performance of our business operations, we believe that by excluding stock-based compensation, we provide investors supplemental information that is useful in comparing our operating results from period to period and in evaluating our core operations and performance. While we expect to continue to recognize stock-based compensation in the future, management also excludes this expense when evaluating current performance, forecasting future results, measuring core operating results, and making operating and strategic decisions. | |
(b) | This reconciling item represents the amortization of intangible assets related to the acquisitions of various businesses and technologies. As amortization expense represents a non-cash charge that is not directly attributable to the underlying performance of our business operations, we believe that by excluding the amortization of acquisition-related intangible assets, we provide investors with supplemental information that is useful in evaluating our ongoing operations and performance. While the amortization of acquisition-related intangible assets is expected to continue in the future, management also excludes this expense when evaluating current performance, forecasting future results, measuring core operating results, and making operating and strategic decisions. | |
(c) | This reconciling item represents costs associated with acquisition-related activities. Acquisition and other related costs consist primarily of transaction and integration-related costs such as: professional fees for legal, accounting, tax, due diligence, valuation, and other related services; amortization of deferred compensation; consulting fees; required regulatory costs; certain employee, facility, and infrastructure costs; and other related expenses. We believe that by excluding acquisition and other related costs, we provide investors with supplemental information that is useful in comparing our ongoing operating results from period to period and in evaluating our core operations and performance. | |
(d) | This reconciling item represents costs associated with our restructuring plans. During the first quarter of 2014, we initiated a plan to restructure certain of our operations following our December 5, 2013 acquisition of Net Optics, Inc. During the third quarter of 2014, we implemented a company-wide restructuring initiative to restructure our operations to better align our operating costs with our business opportunities. The restructuring costs associated with our restructuring plans primarily relate to employee termination benefits, lease exit costs, and other related costs. We believe that by excluding restructuring costs, we provide investors with supplemental information that is useful in comparing our operating results from period to period and in evaluating our core operations and performance. | |
(e) | This reconciling item represents costs incurred related to (i) internal investigations and any related remediation efforts, (ii) the recently settled securities class action against the company and certain of its current and former officers and directors as well as the recently settled shareholder derivative action, and (iii) the recently settled SEC investigation. These costs consist primarily of legal and accounting fees, recruiting and consulting expenses, severance and retention costs, and other related expenses. We believe that by excluding these non-recurring costs, we are providing our investors with supplemental information that is useful in comparing our operating results from period to period and in evaluating our core operations and performance. | |
(f) | This adjustment represents the income tax effects of the reconciling items noted in footnotes (a), (b), (c), (d), and (e) as well as certain other non-cash income tax impacts such as changes in the valuation allowance relating to certain deferred tax assets. | |
(g) | This reconciling item for the non-GAAP diluted earnings per share calculation for the three months ended December 31, 2015 includes the impact of our convertible senior notes as these were anti-dilutive for the equivalent GAAP earnings per share calculations. | |
IXIA | ||||||||
Non-GAAP Information and Reconciliation to Most Directly Comparable GAAP Financial Measures | ||||||||
(in thousands, except per share data) | ||||||||
(unaudited) |
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Year Ended | ||||||||
December 31, | ||||||||
2016 | 2015 | |||||||
GAAP net income | $ | 9,020 | $ | 5,951 | ||||
Adjustments: | ||||||||
Stock-based compensation (a) | 18,707 | 18,976 | ||||||
Amortization of intangible assets (b) | 39,099 | 42,315 | ||||||
Acquisition and other related costs (c) | 785 | 656 | ||||||
Restructuring (d) | (130 | ) | (517 | ) | ||||
Investigations, shareholder litigation and related matters (e) | 1,477 | 6,454 | ||||||
Income tax effect (f) | (13,819 | ) | (17,160 | ) | ||||
Non-GAAP net income | $ | 55,139 | $ | 56,675 | ||||
GAAP diluted income per share | $ | 0.11 | $ | 0.07 | ||||
Adjustments: | ||||||||
Stock-based compensation (a) | 0.23 | 0.23 | ||||||
Amortization of intangible assets (b) | 0.47 | 0.52 | ||||||
Acquisition and other related costs (c) | 0.01 | 0.01 | ||||||
Restructuring (d) | 0.00 | (0.01 | ) | |||||
Investigations, shareholder litigation and related matters (e) | 0.02 | 0.08 | ||||||
Income tax effect (f) | (0.18 | ) | (0.21 | ) | ||||
Convertible senior notes (g) | — | (0.02 | ) | |||||
Non-GAAP diluted earnings per share | $ | 0.66 | $ | 0.67 | ||||
Shares used in computing GAAP diluted earnings per common share | 83,008 | 81,459 | ||||||
Effect of reconciling item (g) | — | 8,350 | ||||||
Shares used in computing non-GAAP diluted earnings per common share | 83,008 | 89,809 | ||||||
(a) | This reconciling item represents stock-based compensation. As stock-based compensation represents a non-cash charge that is not directly attributable to the underlying performance of our business operations, we believe that by excluding stock-based compensation, we provide investors supplemental information that is useful in comparing our operating results from period to period and in evaluating our core operations and performance. While we expect to continue to recognize stock-based compensation in the future, management also excludes this expense when evaluating current performance, forecasting future results, measuring core operating results, and making operating and strategic decisions. | |
(b) | This reconciling item represents the amortization of intangible assets related to the acquisitions of various businesses and technologies. As amortization expense represents a non-cash charge that is not directly attributable to the underlying performance of our business operations, we believe that by excluding the amortization of acquisition-related intangible assets, we provide investors with supplemental information that is useful in evaluating our ongoing operations and performance. While the amortization of acquisition-related intangible assets is expected to continue in the future, management also excludes this expense when evaluating current performance, forecasting future results, measuring core operating results, and making operating and strategic decisions. | |
(c) | This reconciling item represents costs associated with acquisition-related activities. Acquisition and other related costs consist primarily of transaction and integration-related costs such as: professional fees for legal, accounting, tax, due diligence, valuation, and other related services; amortization of deferred compensation; consulting fees; required regulatory costs; certain employee, facility and infrastructure costs; and other related expenses. We believe that by excluding acquisition and other related costs, we provide investors with supplemental information that is useful in comparing our ongoing operating results from period to period and in evaluating our core operations and performance. | |
(d) | This reconciling item represents costs associated with our restructuring plans. During the first quarter of 2014, we initiated a plan to restructure certain of our operations following our December 5, 2013 acquisition of Net Optics, Inc. During the third quarter of 2014, we implemented a company-wide restructuring initiative to restructure our operations to better align our operating costs with our business opportunities. The restructuring costs associated with our restructuring plans primarily relate to employee termination benefits, lease exit costs, and other related costs. We believe that by excluding restructuring costs, we provide investors with supplemental information that is useful in comparing our operating results from period to period and in evaluating our core operations and performance. | |
(e) | This reconciling item represents costs incurred related to (i) internal investigations and any related remediation efforts, (ii) the recently settled securities class action against the company and certain of its current and former officers and directors as well as the recently settled shareholder derivative action, and (iii) the recently settled SEC investigation. These costs consist primarily of legal and accounting fees, recruiting and consulting expenses, severance and retention costs, and other related expenses. We believe that by excluding these non-recurring costs, we are providing our investors with supplemental information that is useful in comparing our operating results from period to period and in evaluating our core operations and performance. | |
(f) | This adjustment represents the income tax effects of the reconciling items noted in footnotes (a), (b), (c), (d), and (e) as well as certain other non-cash income tax impacts such as changes in the valuation allowance relating to certain deferred tax assets. | |
(g) | This reconciling item for the non-GAAP diluted earnings per share calculation for the year ended December 31, 2015 includes the impact of our convertible senior notes as these were anti-dilutive for the equivalent GAAP earnings per share calculations. | |
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Source:
Investor Relations Contact:
The Blueshirt Group
Maria Riley, 415-217-7722
Investor Relations