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8-K - FORM 8-K - IXIA | v58533e8vk.htm |
Exhibit 99.1
Ixia
Announces Record Revenue for Fourth Quarter and Fiscal Year
2010
Q4 Revenue of $77.8 Million; 39 Percent Year-Over-Year Growth
CALABASAS, CA, February 3, 2011 -- Ixia (Nasdaq: XXIA) today reported its financial results for the
fourth quarter and year ended December 31, 2010.
Total revenue for the 2010 fourth quarter grew to a record $77.8 million, an increase of 39 percent
compared with $56.1 million reported for the 2009 fourth quarter and an increase of 10 percent
compared with $70.9 million reported in the immediately preceding quarter. Total revenue for the
fiscal year 2010 was $276.8 million, an increase of 56 percent compared with $178.0 million
reported in fiscal year 2009.
Fiscal year 2010 and 2009 revenue include approximately $70.0 million and $24.1 million,
respectively, of sales attributable to IxN2X and IxCatapult products following the acquisition of
Agilent Technologies N2X Data Network Testing Product Line in October 2009 and the acquisition of
Catapult Communications in June 2009. These numbers do not include revenue from Ixias Fusion
products that integrate N2X software and scripts on Ixia hardware or revenue from Ixias products
that incorporate Catapult wireless technology.
On a GAAP basis, the company recorded net income for the 2010 fourth quarter of $5.3 million, or
$0.08 per diluted share, compared with a net loss of $31.3 million, or $0.50 per share, for the
2009 fourth quarter. The company recorded net income for fiscal year 2010 of $10.7 million, or
$0.16 per diluted share, compared with a net loss of $44.2 million, or $0.70 per share, in fiscal
year 2009.
Non-GAAP net income for the 2010 fourth quarter was $13.2 million, or $0.18 per diluted share,
compared with non-GAAP net income of $4.1 million, or $0.06 per diluted share, reported in the 2009
fourth quarter. The company recorded non-GAAP net income for fiscal year 2010 of $33.1 million, or
$0.49 per diluted share, compared with $8.0 million, or $0.13 per diluted share, in fiscal year
2009.
Additional non-GAAP information and reconciliation of our non-GAAP measures to comparable GAAP
measures for the 2010 and 2009 fourth quarters and fiscal years may be found in the attached
financial tables.
Our key strategy for 2010 was to focus on integrating and leveraging our 2009 acquisitions with
our existing technology portfolio and customer base, commented Atul Bhatnagar, Ixias president
and chief executive officer. Our success in these integration efforts allowed us to take advantage of
improved market conditions in 2010. Strong revenue performance coupled with operating expense
discipline resulted in solid bottom-line results, including significant increases in both our
operating income and earnings per share.
We are pleased with our strong fourth quarter revenue results, which were driven by sequential
growth in North America, Europe, China and India, continued Mr. Bhatnagar. Additionally, we are
encouraged by the traction we see for the new products we launched in the fourth quarter, including
the XcellonTM family and the integrated IxLoad and IxCatapult solution used to test
wireless networks.
Ixia ended the fourth quarter with approximately $339 million in cash and investments, compared
with $121 million at September 30, 2010. The sequential increase in cash and investments is
primarily due to the net proceeds of $194 million received from the issuance of our convertible
senior notes in December 2010, as well as cash flows generated from our operations and our
employees exercise of equity incentive awards.
Conference Call and Webcast Information
Ixia will host a conference call today, at 5:00 p.m., Eastern Time, for analysts and investors to
discuss its 2010 fourth quarter and fiscal year results and its business outlook for the 2011 first
quarter. Open to the public, investors may access the call by dialing (678) 825-8347. A live
webcast of the conference call, along with supplemental financial information, will be accessible
from the Investors section of Ixias web site (www.ixiacom.com). Following the live webcast, an
archived version will be available in the Investors section on the Ixia web site for 90 days.
Non-GAAP Information
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 and in the attachments hereto. Specifically, we have provided non-GAAP financial measures
(e.g., non-GAAP cost of revenues, non-GAAP operating expenses, non-GAAP operating income, non-GAAP
interest income and other, net, non-GAAP income tax expense, non-GAAP net income, and non-GAAP
diluted earnings per share) that exclude certain non-cash and/or non-recurring income and expense
items such as proceeds and expenses from certain legal settlements, stock-based compensation
expenses, acquisition and other related costs, the amortization of acquisition-related intangible
assets, restructuring expenses, certain inventory adjustments, the impairment charges and proceeds
related to certain investments, and the related income tax effects of these items, as well as the
income tax impacts of the valuation allowance recorded against certain deferred tax assets. The
aforementioned items represent income and expense items that may be difficult to estimate from
period to period and that we believe are not directly attributable to the underlying performance of
our business operations. These non-GAAP financial measures are provided to enhance the users
overall understanding of our financial performance. We believe that by excluding these items, our
non-GAAP measures provide supplemental information to both management and investors that is useful
in assessing our core operating performance, in evaluating our ongoing business operations and in comparing
our results of operations on a consistent basis
from period to period. These non-GAAP financial measures are also used by management to plan and
forecast future periods and to assist in making operating and strategic decisions. The presentation
of this additional information is not prepared in accordance with GAAP. The information therefore
may not necessarily be comparable to that of other companies and should be considered as a
supplement to, not a
substitute for, or superior to, the corresponding measures calculated in
accordance with GAAP. Investors are encouraged to review the reconciliations of GAAP to non-GAAP
financial measures which are included below in this press release.
About Ixia
Ixia is a leading provider of converged IP performance test systems and service verification
platforms for wireless and wired infrastructures and services. Ixias test systems are used by
network and telephony equipment manufacturers, semiconductor manufacturers, service providers,
governments and enterprises to validate the performance and reliability of complex networks,
devices and applications. Ixias multiplay test systems address the growing need to test voice,
video and data services and network capability under real-world conditions.
For more information, contact Ixia at 26601 W. Agoura Road, Calabasas, CA 91302; (818) 871-1800,
Fax: (818) 871-1805; Email: info@ixiacom.com or visit our Web Site at http://www.ixiacom.com.
Ixia, the Ixia four-petal logo, IxCatapult, IxN2X, Catapult, N2X, IxLoad and Xcellon are registered
trademarks or trademarks of Ixia.
Safe Harbor Under the Private Securities Litigation Reform Act of 1995:
Certain statements made in this document are forward-looking statements, including, without
limitation, statements regarding possible future revenues, cost savings, growth and profitability
and future business and market share. In some cases, such forward looking statements can be
identified by terms such as may, will, should, could, would, expect, plan,
anticipate, believe, estimate, project, predict, potential, and variations of these
words and similar expressions are intended to identify forward-looking statements. These statements
reflect our current views with respect to future events and are based on assumptions and are
subject to risks and uncertainties. These risks, uncertainties and other factors may cause our
future results, performances or achievements to be materially different from those expressed or
implied by our forward-looking statements and include, among other things: the current global
economy, competition, our ability to successfully defend any claims from taxing authorities in the
various countries where we conduct business, consistency of orders from significant customers, our
success in developing and producing new products and market acceptance of our products. The factors
that may cause future results to differ materially from our current expectations also include,
without limitation, the risks identified in our Annual Report on Form 10-K for the year ended
December 31, 2009, and in our other filings with the Securities and Exchange Commission. Many of
these risks and uncertainties are outside of our control and are difficult for us to forecast or
mitigate. We undertake no obligation to update any forward-looking statements, whether as a result
of new information, future events or otherwise.
Financial Contact:
The Blueshirt Group
Investor Relations
Chris Danne or Maria Riley 415-217-7722
or
Tom Miller, Chief Financial Officer
Dir: 818-444-2325
tmiller@ixiacom.com
The Blueshirt Group
Investor Relations
Chris Danne or Maria Riley 415-217-7722
or
Tom Miller, Chief Financial Officer
Dir: 818-444-2325
tmiller@ixiacom.com
IXIA
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
December 31, | December 31, | |||||||
2010 | 2009 | |||||||
Assets |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 76,082 | $ | 15,061 | ||||
Short-term investments in marketable securities |
151,696 | 10,337 | ||||||
Accounts receivable, net |
67,838 | 55,765 | ||||||
Inventories |
28,965 | 14,541 | ||||||
Prepaid expenses and other current assets |
12,772 | 9,727 | ||||||
Total current assets |
337,353 | 105,431 | ||||||
Investments in marketable securities |
111,440 | 53,582 | ||||||
Property and equipment, net |
22,745 | 18,693 | ||||||
Intangible assets, net |
52,778 | 69,132 | ||||||
Goodwill |
59,384 | 60,121 | ||||||
Other assets |
6,307 | 2,129 | ||||||
Total assets |
$ | 590,007 | $ | 309,088 | ||||
Liabilities and Shareholders Equity |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 10,324 | $ | 6,136 | ||||
Accrued expenses |
34,001 | 21,253 | ||||||
Deferred revenues |
37,505 | 29,842 | ||||||
Income taxes payable |
1,649 | 1,263 | ||||||
Total current liabilities |
83,479 | 58,494 | ||||||
Deferred revenues |
9,170 | 7,309 | ||||||
Other liabilities |
6,378 | 6,620 | ||||||
Convertible senior notes |
200,000 | | ||||||
Total liabilities |
299,027 | 72,423 | ||||||
Shareholders equity: |
||||||||
Common stock, without par value; 200,000
shares authorized at December 31, 2010 and
2009; 67,613 and 63,062 shares issued and
outstanding as of December 31, 2010 and 2009,
respectively |
115,590 | 87,283 | ||||||
Additional paid-in capital |
133,249 | 118,754 | ||||||
Retained earnings |
39,687 | 28,979 | ||||||
Accumulated other comprehensive income |
2,454 | 1,649 | ||||||
Total shareholders equity |
290,980 | 236,665 | ||||||
Total liabilities and shareholders equity |
$ | 590,007 | $ | 309,088 | ||||
IXIA
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
Three months ended | Year ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Revenues: |
||||||||||||||||
Products |
$ | 63,746 | $ | 45,273 | $ | 227,880 | $ | 142,871 | ||||||||
Services |
14,034 | 10,818 | 48,935 | 35,123 | ||||||||||||
Total revenues |
77,780 | 56,091 | 276,815 | 177,994 | ||||||||||||
Costs and operating expenses:(1) |
||||||||||||||||
Cost of revenues products |
14,929 | 10,751 | 54,378 | 36,722 | ||||||||||||
Cost of revenues services |
1,766 | 1,292 | 6,327 | 3,859 | ||||||||||||
Research and development |
18,165 | 16,976 | 72,488 | 53,977 | ||||||||||||
Sales and marketing |
22,000 | 17,384 | 79,986 | 60,374 | ||||||||||||
General and administrative |
9,475 | 7,964 | 35,142 | 28,061 | ||||||||||||
Amortization of intangible assets |
3,869 | 4,906 | 17,545 | 11,391 | ||||||||||||
Acquisition and other related |
| 2,777 | 2,991 | 6,179 | ||||||||||||
Restructuring |
| 1,099 | 3,587 | 4,637 | ||||||||||||
Total costs and operating expenses |
70,204 | 63,149 | 272,444 | 205,200 | ||||||||||||
Income (loss) from operations |
7,576 | (7,058 | ) | 4,371 | (27,206 | ) | ||||||||||
Interest income and other, net |
672 | 588 | 10,346 | 2,160 | ||||||||||||
Interest expense |
(480 | ) | | (480 | ) | | ||||||||||
Other-than-temporary impairment on investments |
| | | (2,761 | ) | |||||||||||
Income (loss) before income taxes |
7,768 | (6,470 | ) | 14,237 | (27,807 | ) | ||||||||||
Income tax expense |
2,442 | 24,865 | 3,529 | 16,396 | ||||||||||||
Net income (loss) |
$ | 5,326 | $ | (31,335 | ) | $ | 10,708 | $ | (44,203 | ) | ||||||
Earnings (loss) per share: |
||||||||||||||||
Basic |
$ | 0.08 | $ | (0.50 | ) | $ | 0.16 | $ | (0.70 | ) | ||||||
Diluted |
$ | 0.08 | $ | (0.50 | ) | $ | 0.16 | $ | (0.70 | ) | ||||||
Weighted average number of common and common
equivalent shares outstanding: |
||||||||||||||||
Basic |
66,974 | 62,891 | 65,157 | 62,710 | ||||||||||||
Diluted |
70,392 | 62,891 | 67,769 | 62,710 | ||||||||||||
(1) Stock-based compensation included
in: |
||||||||||||||||
Cost of revenues - products |
$ | 153 | $ | 139 | $ | 524 | $ | 478 | ||||||||
Cost of revenues - services |
58 | 53 | 198 | 182 | ||||||||||||
Research and development |
1,447 | 1,232 | 5,195 | 4,491 | ||||||||||||
Sales and marketing |
1,089 | 657 | 3,592 | 2,989 | ||||||||||||
General and administrative |
938 | 409 | 3,406 | 2,395 |
IXIA
Non-GAAP Information and Reconciliation to Comparable GAAP Financial Measures
(in thousands, except percentages and per share data)
(unaudited)
Non-GAAP Information and Reconciliation to Comparable GAAP Financial Measures
(in thousands, except percentages and per share data)
(unaudited)
Three months ended December 31, | |||||||||||||||||
2010 | 2009 | ||||||||||||||||
% Total | % Total | ||||||||||||||||
Amount ($) | Revenues | Amount ($) | Revenues | ||||||||||||||
Total cost of revenues GAAP |
$ | 16,695 | 21.5 | % | $ | 12,043 | 21.5% | ||||||||||
Stock-based compensation(a) |
(211 | ) | -0.3 | % | (192 | ) | -0.4% | ||||||||||
Total cost of revenues Non-GAAP |
$ | 16,484 | 21.2 | % | $ | 11,851 | 21.1% | ||||||||||
Operating expenses GAAP |
$ | 53,509 | 68.8 | % | $ | 51,106 | 91.1% | ||||||||||
Amortization of intangible assets(b) |
(3,869 | ) | -5.0 | % | (4,906 | ) | -8.7% | ||||||||||
Acquisition and other related(c) |
| | % | (2,777 | ) | -5.0% | |||||||||||
Restructuring(d) |
| | % | (1,099 | ) | -2.0% | |||||||||||
Stock-based compensation(a) |
(3,474 | ) | -4.5 | % | (2,298 | ) | -4.0% | ||||||||||
Legal settlements(e) |
(1,275 | ) | -1.6 | % | | % | |||||||||||
Operating expenses Non-GAAP |
$ | 44,891 | 57.7 | % | $ | 40,026 | 71.4% | ||||||||||
Income (loss) from operations GAAP |
$ | 7,576 | 9.7 | % | $ | (7,058 | ) | -12.6% | |||||||||
Effect of reconciling items(f) |
8,829 | 11.4 | % | 11,272 | 20.1% | ||||||||||||
Income from operations Non-GAAP |
$ | 16,405 | 21.1 | % | $ | 4,214 | 7.5% | ||||||||||
Interest income and other, net GAAP |
$ | 672 | 0.9 | % | $ | 588 | 1.0% | ||||||||||
Auction rate securities settlements(g) |
(994 | ) | -1.3 | % | | % | |||||||||||
Interest income and other, net Non-GAAP |
$ | (322 | ) | -0.4 | % | $ | 588 | 1.0% | |||||||||
Income tax expense GAAP |
$ | 2,442 | 3.1 | % | $ | 24,865 | 44.3% | ||||||||||
Effect of reconciling items(h) |
(13 | ) | 0.0 | % | (24,136 | ) | -43.0% | ||||||||||
Income tax expense Non-GAAP |
$ | 2,429 | 3.1 | % | $ | 729 | 1.3% | ||||||||||
Net income (loss) GAAP |
$ | 5,326 | 6.8 | % | $ | (31,335 | ) | -55.9% | |||||||||
Effect of reconciling items(i) |
7,848 | 10.1 | % | 35,408 | 63.2% | ||||||||||||
Net income Non-GAAP |
$ | 13,174 | 16.9 | % | $ | 4,073 | 7.3% | ||||||||||
Diluted earnings (loss) per share GAAP |
$ | 0.08 | $ | (0.50 | ) | ||||||||||||
Effect of reconciling items(j)(k) |
0.10 | 0.56 | |||||||||||||||
Diluted earnings per share Non-GAAP |
$ | 0.18 | $ | 0.06 | |||||||||||||
(a) | This reconciling item represents stock-based compensation expenses. 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, investors are provided with
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 expense 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 such as the
acquisitions of Catapult Communications Corporation, Agilent Technologies N2X Data Network Testing Product Line and the acquisition of certain rights
associated with the Chariot® product line from NetIQ Corporation. As the 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, investors are provided with supplemental information that is useful in evaluating our ongoing operations and performance. While the amortization
of 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 our acquisitions of Catapult Communications Corporation in June 2009 and Agilent Technologies N2X Data Network Testing Product Line in October 2009. Acquisition and other related costs consist primarily of transaction and integration related costs such as professional fees for legal, accounting and tax services, integration related consulting fees, certain employee, facility and infrastructure transition 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 plan announced during the second quarter of 2009 as well as the restructuring costs related to our acquisition of Catapult Communications Corporation. These costs primarily relate to one-time employee termination benefits consisting of severance and other related costs, as well as some facility-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 estimated and actual legal settlements recorded in the fourth quarter of 2010 that is not directly attributable to the underlying performance of our business operations, we believe that by excluding these 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. | |
(f) | This adjustment represents the effects of the reconciling items noted in footnotes (a), (b), (c), (d) and (e). | |
(g) | This reconciling item represents proceeds received during the fourth quarter of 2010 for the sale of certain of our auction rate securities that were previously written-off. As these proceeds are not directly attributable to the underlying performance of our business operations, we believe that by excluding these proceeds, 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. | |
(h) | This adjustment represents the income tax effects of the reconciling items noted in footnotes (a), (b), (c), (d), (e) and (g) as well as changes in the valuation allowance relating to the companys deferred tax assets. | |
(i) | This adjustment represents the effects of the reconciling items noted in footnotes (a), (b), (c), (d), (e) and (g), net of tax. | |
(j) | This adjustment represents the effects of the reconciling items noted in footnotes (a), (b), (c), (d), (e) and (g), net of tax, on a diluted per share basis. | |
(k) | This reconciling item for the 2010 fourth quarter non-GAAP diluted earnings per share calculation includes the impact of the convertible senior notes as these were anti-dilutive for the equivalent GAAP dilutive earnings per share calculation. |
IXIA
Non-GAAP Information and Reconciliation to Comparable GAAP Financial Measures
(in thousands, except percentages and per share data)
(unaudited)
Non-GAAP Information and Reconciliation to Comparable GAAP Financial Measures
(in thousands, except percentages and per share data)
(unaudited)
Year ended December 31, | |||||||||||||||||
2010 | 2009 | ||||||||||||||||
% Total | % Total | ||||||||||||||||
Amount ($) | Revenues | Amount ($) | Revenues | ||||||||||||||
Total cost of revenues GAAP |
$ | 60,705 | 21.9 | % | $ | 40,581 | 22.8% | ||||||||||
Inventory write-down(a) |
| | % | (1,785 | ) | -1.0% | |||||||||||
Stock-based compensation(b) |
(722 | ) | -0.2 | % | (660 | ) | -0.4% | ||||||||||
Total cost of revenues Non-GAAP |
$ | 59,983 | 21.7 | % | $ | 38,136 | 21.4% | ||||||||||
Operating expenses GAAP |
$ | 211,739 | 76.5 | % | $ | 164,619 | 92.5% | ||||||||||
Amortization of intangible assets(c) |
(17,545 | ) | -6.3 | % | (11,391 | ) | -6.4% | ||||||||||
Acquisition and other related(d) |
(2,991 | ) | -1.1 | % | (6,179 | ) | -3.5% | ||||||||||
Restructuring(e) |
(3,587 | ) | -1.3 | % | (4,637 | ) | -2.6% | ||||||||||
Stock-based compensation(b) |
(12,193 | ) | -4.4 | % | (9,875 | ) | -5.5% | ||||||||||
Legal settlements(f) |
(1,275 | ) | -0.5 | % | | % | |||||||||||
Operating expenses Non-GAAP |
$ | 174,148 | 62.9 | % | $ | 132,537 | 74.5% | ||||||||||
Income (loss) from operations GAAP |
$ | 4,371 | 1.6 | % | $ | (27,206 | ) | -15.3% | |||||||||
Effect of reconciling items(g) |
38,313 | 13.8 | % | 34,527 | 19.4% | ||||||||||||
Income from operations Non-GAAP |
$ | 42,684 | 15.4 | % | $ | 7,321 | 4.1% | ||||||||||
Interest income and other, net GAAP |
$ | 10,346 | 3.7 | % | $ | 2,160 | 1.2% | ||||||||||
Auction rate securities settlements(h) |
(9,919 | ) | -3.5 | % | | % | |||||||||||
Interest income and other, net Non-GAAP |
$ | 427 | 0.2 | % | $ | 2,160 | 1.2% | ||||||||||
Other-than-temporary impairment on investments GAAP |
$ | | | % | $ | (2,761 | ) | -1.6% | |||||||||
Effect of reconciling items(i) |
| | % | 2,761 | 1.6% | ||||||||||||
Other-than-temporary impairment on investments Non-GAAP |
$ | | | % | $ | | % | ||||||||||
Income tax expense GAAP |
$ | 3,529 | 1.3 | % | $ | 16,396 | 9.2% | ||||||||||
Effect of reconciling items(j) |
6,003 | 2.1 | % | (14,925 | ) | -8.4% | |||||||||||
Income tax expense Non-GAAP |
$ | 9,532 | 3.4 | % | $ | 1,471 | 0.8% | ||||||||||
Net income (loss) GAAP |
$ | 10,708 | 3.9 | % | $ | (44,203 | ) | -24.8% | |||||||||
Effect of reconciling items(k) |
22,391 | 8.1 | % | 52,213 | 29.3% | ||||||||||||
Net income Non-GAAP |
$ | 33,099 | 12.0 | % | $ | 8,010 | 4.5% | ||||||||||
Diluted earnings (loss) per share GAAP |
$ | 0.16 | $ | (0.70 | ) | ||||||||||||
Effect of reconciling items(l)(m) |
0.33 | 0.83 | |||||||||||||||
Diluted earnings per share Non-GAAP |
$ | 0.49 | $ | 0.13 | |||||||||||||
(a) | This reconciling item consists primarily of the write-down of certain inventory items and the recognition of purchase price accounting related to the fair value
of sold inventory attributable to the acquisition of Catapult Communications Corporation. While we may have additional inventory write-downs in the future as
well as amortization of purchase price accounting adjustments, management excludes these expenses when evaluating current performance, forecasting future results,
measuring core operating results, and making operating and strategic decisions. We believe that by excluding these charges, 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. |
(b) | This reconciling item represents stock-based compensation expenses. 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, investors are provided with 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 expense 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 the amortization of intangible assets related to the acquisitions of various businesses and technologies such as the acquisitions
of Catapult Communications Corporation, Agilent Technologies N2X Data Network Testing Product line and the acquisition of certain rights associated with the
Chariot® product line from NetIQ Corporation. As the 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, investors are provided with
supplemental information that is useful in evaluating our ongoing operations and performance. While the amortization of 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. |
|
(d) | This reconciling item represents costs associated with our acquisitions of Catapult Communications Corporation in June 2009 and Agilent Technologies N2X Data
Network Testing Product line in October 2009. Acquisition and other related costs consist primarily of transaction and integration related costs such as
success-based banking fees, professional fees for legal, accounting, tax, valuation and other related services, integration related consulting fees, required
regulatory 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. |
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(e) | This reconciling item represents costs associated with our restructuring plan announced during the second quarter of 2010 as well as the restructuring costs
related to our acquisition of Catapult Communications Corporation and Agilent Technologies N2X Data Network Testing Product line. These costs primarily relate to
one-time employee termination benefits consisting of severance and other related costs, as well as some facility-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. |
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(f) | This reconciling item represents estimated and actual legal settlements recorded in the fourth quarter of 2010 that is not directly attributable to the underlying performance of our business operations, we believe that by excluding these 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. | |
(g) | This adjustment represents the effects of the reconciling items noted in footnotes (a), (b), (c), (d), (e) and (f). | |
(h) | This reconciling item represents settlement proceeds during the first quarter of 2010 relating to claims asserted by us against our former investment manager for damages and losses relating to our investments in auction rate securities with an aggregate par value of $19.0 million, as well as proceeds received during the fourth quarter of 2010 for the sale of certain of our auction rate securities that were previously written-off. As the settlement proceeds are not directly attributable to the underlying performance of our business operations, we believe that by excluding these settlement proceeds, 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. | |
(i) | This reconciling item represents other-than-temporary impairment charges on our previous investments in auction rate securities. As this other-than-temporary impairment represents a non-cash charge that is not directly attributable to the underlying performance of our business operations, we believe that by excluding this other-than-temporary impairment, 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. | |
(j) | This adjustment represents the income tax effects of the reconciling items noted in footnotes (a), (b), (c), (d), (e), (f), (h) and (i) as well as changes in the valuation allowance relating to the companys deferred tax assets. | |
(k) | This adjustment represents the effects of the reconciling items noted in footnotes (a), (b), (c), (d), (e), (f), (h) and (i), net of tax. | |
(l) | This adjustment represents the effects of the reconciling items noted in footnotes (a), (b), (c), (d), (e), (f), (h) and (i), net of tax, on a diluted per share basis. | |
(m) | This reconciling item for the 2010 year end non-GAAP diluted earnings per share calculation includes the impact of the convertible senior notes as these were anti-dilutive for the equivalent GAAP dilutive earnings per share calculation. |