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8-K - FORM 8-K - INTELLON CORP | d8k.htm |
Exhibit 99.1
For More Information
Investor Contact:
Brian McGee
Senior Vice President & Chief Financial Officer
Intellon Corporation
352-237-7416
brian.mcgee@intellon.com
Press Contact:
Suzanne Craig
The Blueshirt Group for Intellon Corporation
415-217-7722
suzanne@blueshirtgroup.com
Intellon Reports Third Quarter Fiscal 2009 Results
Revenue Grows 14% Sequentially to $19.9 Million
Orlando, Fla. October 22, 2009 Intellon Corporation (Nasdaq: ITLN), a leading provider of HomePlug®-compatible integrated circuits (ICs) for home networking, networked entertainment, Ethernet-over-Coax (EoC) and smart grid applications, today reported financial results for the third quarter ended September 30, 2009.
Total revenue for the third quarter of 2009 was $19.9 million, a 14% sequential increase from the second quarter of 2009 and a 1% year-over-year decline from the third quarter of 2008.
Revenue derived from sales of HomePlug-compatible ICs comprised 99% of total revenue for the third quarter of 2009 and totaled $19.7 million, a 14% sequential increase from the second quarter of 2009 and a 1% year-over-year increase from the third quarter of 2008.
Intellon reported gross margins of 50.5% for the third quarter of 2009 compared with 50.4% in the second quarter of 2009 and 40.7% in the year ago quarter.
In accordance with generally accepted accounting principles (GAAP), Intellon reported a net loss of $0.4 million, or $0.01 per share (basic and diluted), primarily due to merger related expenses of approximately $1.8 million, for the third quarter of 2009, compared with net income of $0.3 million, or $0.01 per share (basic and diluted), for the second quarter of 2009, and net income of $0.5 million, or $0.02 per share (basic and diluted), for the third quarter of 2008.
Non-GAAP net income in the third quarter of 2009 was $2.0 million, or $0.06 per share (basic and diluted), compared with non-GAAP net income of $0.9 million, or $0.03 per share (basic and diluted), for the second quarter of 2009, and non-GAAP net income of $0.9 million, or $0.03 per share (basic and diluted), for the third quarter of 2008.
A detailed reconciliation between GAAP and non-GAAP net income (loss) is provided in a table following the condensed consolidated statements of operations.
Fueled by our global customer base and diversified sales channels, Intellon delivered another strong quarter of operating results, said Charles E. Harris, Chairman and CEO of Intellon. Our service provider and Ethernet-over-Coax business grew sequentially by 30% and 25%, respectively, contributing to our 14% sequential revenue growth for the quarter. Our gross margins of 50.5% represented a 980 basis point improvement over the year ago period and our third sequential quarter of gross margins above 50.0%. We also remained disciplined in our financial management, delivering better-than-expected non-GAAP EPS of $0.06 and positive cash flow, Harris continued.
On September 8, 2009 Atheros and Intellon announced a definitive agreement for Atheros to acquire Intellon, Harris added. The Intellon team is excited about the opportunity to combine its knowledge and expertise in wired networking with Atheros leadership in wireless LAN and other network communications, Harris concluded.
Recent Business Highlights:
| Intellon INT6400 HomePlug AV-based powerline communications chipset selected by Grid Net for smart grid electricity meter to provide home area network communications capability for new smart meters. |
| NETGEAR selects Intellons INT6400 for HomePlug AV-enabled home theater Internet connection kit, enabling multiple home entertainment products (such as Ethernet-enabled HDTVs, set-top boxes, game consoles and Blu-ray players) to access the Internet over existing home wiring. |
| LinkSprite selects Intellon to enable powerline communications for electronic devices with serial interface ports, providing HomePlug powerline connectivity for thousands of electronic devices with UART, RS232, RS485, USB, or ZigBee ports. |
| KMC Controls selects Intellon chipset for first HomePlug-based programmable communicating thermostat, providing reliable communications from the thermostat to the electric meter using embedded Intellon powerline carrier technology. |
| Intellon announced its intent to move its Ocala facility to expanding technology corridor in downtown Ocala. |
| Atheros and Intellon entered into a definitive agreement for Atheros to acquire Intellon in a stock and cash transaction valued at approximately $244 million, or $181 million net of Intellons cash, cash equivalents and short-term investments as of June 30, 2009. The combination of best-in-class wireless and wired technologies promises major advances toward seamless networking throughout the digital home. |
| ST&T selects Intellons HomePlug AV-based INT6400 for HD Media Link System that distributes 1080p high definition video, and is designed to link Blu-ray players, DVRs, game consoles, set-top boxes, NAS drives, and multimedia hubs to TVs throughout the home using existing electrical wiring. |
| Entropic and Intellon collaborating on home networking solutions using coax and powerline, working together to deliver current and next-generation home networking solutions that are backwards-compatible with tens of millions of deployed devices. |
As a result of the proposed acquisition of Intellon by Atheros, management will not be hosting a conference call in conjunction with this announcement.
About Intellon Corporation
Intellon (Nasdaq: ITLN) is a market leader in powerline communications, providing HomePlug® compliant and other powerline integrated circuits for home networking, networked entertainment, Ethernet-over-Coax (EoC), smart grid management, BPL access and other commercial applications. Intellon created and patented the baseline technology for HomePlug 1.0, and is a major contributor to the baseline technology for the 200-Mbps PHY-rate HomePlug AV powerline standard and the draft IEEE 1901 powerline standard. With more than 35 million HomePlug-based ICs sold, Intellon is the market share leader in the HomePlug IC market. Intellon was founded in 1989 and is headquartered in Orlando, Florida, with offices in Ocala, Florida, San Jose, California and Toronto, Canada. For additional information, visit www.intellon.com.
Cautionary Note Regarding Forward-Looking Statements
This release may be deemed to contain forward-looking statements which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements included or incorporated by reference in this release, other than statements or characterizations of historical fact, are forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, among other things, any expectations regarding Intellons growth or business momentum, if any, based on past performance and statements regarding Intellons proposed acquisition by Atheros. Forward-looking statements involve risks and uncertainties that could cause Intellons actual results to differ materially from its current expectations. These factors include, but are not limited to: the possibility that the planned acquisition of Intellon by Atheros may not close or the closing may be delayed, including as a result of failure to obtain the approval of Intellons stockholders, the failure to realize any expected benefits of the transaction with Atheros, Intellons customers or suppliers may not react positively to Atheros proposed acquisition of Intellon, and other risks that are described in filings with the Securities and Exchange Commission (SEC) made by Atheros and Intellon in connection with the proposed transaction; Intellons operating results and gross margins are difficult to predict and may fluctuate significantly; if Intellon is unable to maintain revenue growth or manage future growth, if any, effectively, its business could suffer; adverse changes in Intellons ability to accurately forecast demand for its products, including product mix, could negatively impact its revenue, gross margins and inventory levels; Intellon depends upon a small number of customers for a significant portion of its revenue, and the loss of, or reduction or cancellation in orders from, any one of these customers could adversely affect Intellons operations and financial condition; competitive pressures, technical challenges, uncertainties associated with Intellons ability to develop new products in a timely and cost-effective manner, and the risk that the market for powerline communications products may not develop as expected may lead to a decrease in Intellons revenue or market share; the expense and uncertainty involved in customer deployments, changes in industry standards, economic and political conditions in Intellons markets, including the risk of continued volatility and uncertainty in global financial and commercial markets, and reliance by Intellon on third parties to manufacture, test, assemble and ship its products may adversely affect its financial results; if
Intellon is unable to retain and attract key personnel, its business may be harmed; and if Intellon fails to protect its intellectual property rights, it may be unable to compete effectively. These and other risk factors are described in detail in the Risk Factors section of Intellons Form 10-Q dated August 7, 2009, as filed with the SEC. Intellons results of operations for the quarter ended September 30, 2009 are not necessarily indicative of Intellons financial performance for any future periods. Any projections in this release are based on limited information currently available to Intellon, which is subject to change. Although any such projections and the factors influencing them will likely change, Intellon assumes no obligation to update the forward-looking information contained in this release. Such information speaks only as of the date of this release.
Important Additional Information and Where You Can Find It
In connection with the proposed acquisition of Intellon by Atheros, Atheros has filed a registration statement on Form S-4 containing a proxy statement/prospectus and other documents concerning the proposed acquisition with the SEC. Investors and security holders are urged to read the proxy statement/prospectus and any amendments thereto when they become available and other relevant documents filed with the SEC regarding the proposed transaction because they will contain important information. Investors and security holders may obtain a free copy of the proxy statement/prospectus, as amended (when it is available), and other documents filed by Atheros and Intellon with the SEC at the SECs website at www.sec.gov. The proxy statement/prospectus, as amended (when available) and other documents filed with the SEC may also be obtained for free by contacting Atheros Investor Relations by e-mail at ir@atheros.com or by telephone at (408) 830-5762 or by contacting Intellon Investors Relations by email at Suzanne@blueshirtgroup.com or by telephone at (415) 217-4962. Investors may also obtain free copies of the documents filed with the SEC on Atheros website at www.atheros.com or Intellons website at www.intellon.com.
Atheros, Intellon and their respective directors, executive officers and certain members of management and certain employees may be deemed to be participants in the solicitation of proxies from the stockholders of Intellon in connection with the transaction. Additional information concerning Intellons directors and executive officers is set forth in Intellons Proxy Statement for its 2009 Annual Meeting of Stockholders, which was filed with the SEC on April 28, 2009. These documents are available free of charge at the SECs website at www.sec.gov or by going to, respectively, Atheros Investors page on its corporate website at www.atheros.com and Intellons Investor Relations page on its corporate website at www.intellon.com. Additional information regarding the persons who may, under the rules of the SEC, be deemed participants in the solicitation of proxies in connection with the proposed transaction, and a description of their direct and indirect interests in the proposed transaction, which may differ from the interests of the Atheros and Intellon stockholders generally, is set forth in the proxy statement/prospectus that is contained in the registration statement on Form S-4, as amended (when it is available) that was filed by Atheros with the SEC, which is available free of charge at the SECs web site at www.sec.gov or Intellons website at www.intellon.com.
Intellon and No New Wires are registered trademarks of Intellon Corporation. HomePlug is a registered trademark of the HomePlug Powerline Alliance, Inc. All other trademarks mentioned are the property of their respective owners.
INTELLON CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
(in thousands, except per share amounts) | ||||||||||||||||
Revenue |
$ | 19,933 | $ | 20,112 | $ | 52,916 | $ | 54,554 | ||||||||
Cost of revenue |
9,860 | 11,917 | 26,128 | 31,197 | ||||||||||||
Gross profit |
10,073 | 8,195 | 26,788 | 23,357 | ||||||||||||
Cost of operations: |
||||||||||||||||
Research and development |
4,423 | 4,038 | 12,011 | 12,417 | ||||||||||||
Sales and marketing |
2,042 | 1,979 | 6,611 | 6,253 | ||||||||||||
General and administrative |
4,003 | 2,010 | 8,334 | 6,281 | ||||||||||||
Operating income (loss) |
(395 | ) | 168 | (168 | ) | (1,594 | ) | |||||||||
Other income (expense) |
||||||||||||||||
Interest income |
37 | 283 | 130 | 978 | ||||||||||||
Other expense |
(46 | ) | (31 | ) | (94 | ) | (94 | ) | ||||||||
Total other income (expense) |
(9 | ) | 252 | 36 | 884 | |||||||||||
Income (loss) before income taxes |
(404 | ) | 420 | (132 | ) | (710 | ) | |||||||||
Income tax expense (benefit) |
25 | (61 | ) | (35 | ) | (4 | ) | |||||||||
Net income (loss) |
$ | (429 | ) | $ | 481 | $ | (97 | ) | $ | (706 | ) | |||||
Net income (loss) per common share: |
||||||||||||||||
Basic |
$ | (0.01 | ) | $ | 0.02 | $ | (0.00 | ) | $ | (0.02 | ) | |||||
Diluted |
$ | (0.01 | ) | $ | 0.02 | $ | (0.00 | ) | $ | (0.02 | ) | |||||
Weighted-average number of shares used in per share calculations: |
||||||||||||||||
Basic |
31,150 | 30,939 | 31,098 | 30,821 | ||||||||||||
Diluted |
31,150 | 31,175 | 31,098 | 30,821 | ||||||||||||
Statements Concerning Non-GAAP Financial Measurements
The accompanying press release includes non-GAAP net income and non-GAAP net income per share data.
These non-GAAP measures are not in accordance with generally accepted accounting principles and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. The presentation of these measures is not intended to be considered in isolation, or as an alternative for, or superior to, the financial information prepared and presented in accordance with GAAP. Intellon believes that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with Intellons results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate Intellons results of operations in conjunction with the corresponding GAAP measures. Intellon has provided reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures.
Intellons non-GAAP net income and non-GAAP net income per share data exclude stock-based compensation and merger related expenses. Intellon believes that the presentation of such non-GAAP measures, when shown in conjunction with the corresponding GAAP measures, provides useful information to investors and management regarding financial and business trends relating to its financial condition and results of operations.
For additional information on the items excluded by Intellon from one or more of its non-GAAP financial measures, please refer to the Form 8-K regarding this release furnished today with the Securities and Exchange Commission.
Unaudited Reconciliation of Non-GAAP Adjustments
The following table sets forth the 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.
Intellon Corporation
Unaudited Reconciliation of Non-GAAP Adjustments
Three Months Ended | ||||||||||
September 30, 2009 |
June 30, 2009 |
September 30, 2008 | ||||||||
(in thousands, except per share amounts) | ||||||||||
Revenue |
$ | 19,933 | $ | 17,475 | $ | 20,112 | ||||
GAAP net income (loss) |
$ | (429 | ) | $ | 327 | $ | 481 | |||
Non-GAAP adjustments: |
||||||||||
Stock-based compensation: |
||||||||||
Research and development |
178 | 178 | 136 | |||||||
Sales and marketing |
143 | 141 | 109 | |||||||
General and administration |
317 | 278 | 206 | |||||||
Total stock-based compensation |
638 | 597 | 451 | |||||||
Merger related expenses |
1,785 | | | |||||||
Total non-GAAP adjustments |
2,423 | 597 | 451 | |||||||
Non-GAAP net income |
$ | 1,994 | $ | 924 | $ | 932 | ||||
Non-GAAP net income per share: |
||||||||||
Basic |
$ | 0.06 | $ | 0.03 | $ | 0.03 | ||||
Diluted |
$ | 0.06 | $ | 0.03 | $ | 0.03 | ||||
Non-GAAP weighted average shares: |
||||||||||
Basic |
31,150 | 31,095 | 30,939 | |||||||
Diluted |
32,156 | 31,391 | 31,175 | |||||||
Intellon Corporation
Condensed Consolidated Balance Sheets
September 30, 2009 |
December 31, 2008* |
|||||||
(Unaudited) | ||||||||
(in thousands) | ||||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 25,285 | $ | 35,375 | ||||
Short-term investments |
36,967 | 20,230 | ||||||
Accounts receivable |
11,231 | 11,532 | ||||||
Inventory, net |
6,354 | 8,029 | ||||||
Prepaid expenses |
1,301 | 961 | ||||||
Other current assets |
155 | 350 | ||||||
Total current assets |
81,293 | 76,477 | ||||||
Property and equipment, net |
2,407 | 2,241 | ||||||
Intangible assets, net |
2,695 | 2,403 | ||||||
Other assets |
100 | 100 | ||||||
TOTAL ASSETS |
$ | 86,495 | $ | 81,221 | ||||
LIABILITIES AND SHAREHOLDERS EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 10,157 | $ | 6,843 | ||||
Accrued expenses |
2,200 | 2,166 | ||||||
Total current liabilities |
12,357 | 9,009 | ||||||
Deferred income |
200 | | ||||||
Shareholders equity: |
||||||||
Common stock |
3 | 3 | ||||||
Additional paid in capital-common |
209,713 | 207,890 | ||||||
Accumulated deficit |
(135,778 | ) | (135,681 | ) | ||||
Total shareholders equity |
73,938 | 72,212 | ||||||
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY |
$ | 86,495 | $ | 81,221 | ||||
* | Information derived from the audited Consolidated Financial Statements |
INTELLON CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended September 30, |
||||||||
2009 | 2008 | |||||||
(Unaudited) | ||||||||
(in thousands) | ||||||||
Operating Activities |
||||||||
Net loss |
$ | (97 | ) | $ | (706 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: |
||||||||
Stock-based compensation |
1,721 | 1,260 | ||||||
Depreciation |
909 | 774 | ||||||
Amortization of intangible assets |
56 | 48 | ||||||
Accretion of discount on investment securities |
(83 | ) | (172 | ) | ||||
Other |
| 2 | ||||||
Changes in operating assets and liabilities: |
||||||||
Accounts receivable |
301 | (3,252 | ) | |||||
Inventory |
1,675 | (1,695 | ) | |||||
Prepaid expenses and other assets |
(432 | ) | 28 | |||||
Income tax refund |
287 | 75 | ||||||
Accounts payable and accrued expenses |
3,348 | 3,838 | ||||||
Deferred income |
200 | | ||||||
Net cash provided by operating activities |
7,885 | 200 | ||||||
Investing Activities |
||||||||
Purchase of property and equipment |
(1,075 | ) | (1,011 | ) | ||||
Purchase of short-term investments |
(49,404 | ) | (37,461 | ) | ||||
Proceeds from maturity of short-term investments |
32,750 | | ||||||
Purchase of intangible assets, net |
(348 | ) | (565 | ) | ||||
Net cash (used in) investing activities |
(18,077 | ) | (39,037 | ) | ||||
Financing Activities |
||||||||
Proceeds from issuance of common stock, net of issuance costs |
| 5,548 | ||||||
Proceeds from exercise of stock options |
102 | 6 | ||||||
Net cash provided by financing activities |
102 | 5,554 | ||||||
Net decrease in cash and cash equivalents |
(10,090 | ) | (33,283 | ) | ||||
Cash and cash equivalents, beginning of period |
35,375 | 52,074 | ||||||
Cash and cash equivalents, end of period |
$ | 25,285 | $ | 18,791 | ||||