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| 8-K/A - FORM 8-K/A - CAVIUM, INC. | v333582_8ka.htm |
Cavium Announces Financial Results for Q4 2012
SAN JOSE, Calif., Jan. 31, 2013 /PRNewswire/ -- Cavium, Inc. (NASDAQ: CAVM), a leading provider of highly integrated semiconductor products that enable intelligent processing for networking, communications, and the digital home, today announced financial results for the fourth quarter of 2012 ended December 31, 2012.
(Logo: http://photos.prnewswire.com/prnh/20120604/LA18845LOGO)
Revenue in the fourth quarter of 2012 was $66.4 million, an 8.7% sequential increase from the $61.1 million reported in the third quarter of 2012.
Generally Accepted Accounting Principles (GAAP) Results
Net loss for the fourth quarter of 2012, on GAAP basis was $78.8 million, or $(1.56) per diluted share compared to $8.1 million, or $(0.16) per diluted share in the third quarter of 2012. Net loss for the fourth quarter of 2012 included a non-cash charge of $43.5 million to provide for a valuation allowance for US net deferred tax assets, and a $33.3 million non-cash charge related to goodwill and other intangible asset impairment. Gross margins were 62.3% in the fourth quarter of 2012 compared to 59.4% in the third quarter of 2012. Total cash and cash equivalents were $76.8 million at December 31, 2012.
Cavium established a full valuation allowance against its US net deferred tax assets, which resulted in a one-time, non-cash charge of $43.5 million in the fourth quarter of 2012. Had Cavium not established the valuation allowance, it would have recognized a tax benefit of $2.1 million. This tax benefit along with the $43.5 million valuation allowance, produced a net tax expense of $41.4 million in the fourth quarter of 2012. The decision to establish the valuation allowance was based on an assessment made at year-end that considered factors such as 2012 actual results as well as projected US income, and does not preclude Cavium from using its loss carry-forwards or other deferred tax assets in the future.
Cavium recently restructured its Software and Services group. As a result of performing an annual goodwill impairment test in the fourth quarter of 2012, and the impact of the Software and Services group restructuring, Cavium determined that Software and Services goodwill and certain intangible assets were impaired and recorded a $33.3 million, non-cash, goodwill and intangible asset charge in the fourth quarter of 2012.
Non-GAAP
Results
Cavium believes that the presentation of non-GAAP financial measures provides important supplemental information to management and investors regarding financial and business trends relating to Cavium's financial condition and results of operations. These measures should only be used to evaluate Cavium's results of operations in conjunction with the corresponding GAAP measures. Non-GAAP financial measures in the fourth quarter of 2012 exclude expenses totaling $89.5 million related to: valuation allowance on deferred tax assets of $43.5 million; goodwill and intangible impairment of $33.3 million; $8.6 million related to stock-based compensation and related payroll taxes; and $4.1 million related to amortization of acquired intangible assets, acquisition and other expenses as detailed in the reconciliation between GAAP and non-GAAP financial results provided in the
financial statements portion of this release.
Non-GAAP net income for the fourth quarter of 2012 was $10.6 million or $0.20 per diluted share, compared with non-GAAP net income of $7.8 million or $0.15 per diluted share in the third quarter of 2012. Gross margins, on a non-GAAP basis, were 64.5% and operating margins (non-GAAP income from operations as a percentage of revenue), on a non-GAAP basis, were 13.8% in the fourth quarter of 2012.
Recent News Highlights
- January 7, 2013 - Cavium's PureVu® Powers Samsung's Wireless Streaming Adapter for the Latest Galaxy Smartphones
- January 7, 2013 - Cavium to Showcase Complete Cloud-to-Home Solutions with its State-of- the Art Media Streaming and Wi-Fi CERTIFIED Miracast™ Products at International CES 2013
- January 2, 2013 - Cavium PureVu®-based Miracast™ Solutions to Be Included in Wi-Fi Alliance® Demo at CES 2013
- December 6, 2012 - Latest Release of MIPS® Architecture Includes Virtualization and SIMD
- December 3, 2012 - Cavium to Demonstrate Industry-Leading LTE Small Cell Technology at Small Cells Americas 2012
- November 14, 2012 - Cavium Ranked Among Fastest Growing Companies in North America on Deloitte's 2012 Technology Fast 500™
- November 14, 2012 - Cavium and Symmetricom Partner to Enable IEEE 1588 Precision Timing for Small Cell Base Stations
- November 1, 2012 - Industry Leaders Collaborate to Accelerate Software Ecosystem for ARM Servers, and Join Linaro
- October 29, 2012 - Cavium Ships Game Changing NEURON Search™ Processor Family
- October 29, 2012 - Cavium to Demonstrate Industry-Leading LTE Small Cell And TurboDPI Deep Packet Inspection Technology at 4G World
- October 29, 2012 - Cavium's Wireless Display Adapters Deliver Enhanced and Optimized Functionality for the Latest Android 4.2 Release for Smartphones and Tablets
- October 29, 2012 - Cavium's PureVu® to Power LG's New Wireless Display Adapter for the Latest Optimus G and Nexus 4 Smartphones
Cavium, Inc. will broadcast its fourth quarter 2012 financial results conference call today, January 31, 2013, at 2 p.m. Pacific time (5 p.m. Eastern time). The conference call will be available via a live web cast on the investor relations section of the Cavium website at http://www.cavium.com. Please access the website at least a few minutes prior to the start of the call in order to download and install any necessary audio software. An archived web cast replay of the call will be available on the website for a limited period of time.
About Cavium
Cavium is a leading provider of highly integrated semiconductor products that enable intelligent processing for networking, communications and the digital home. Cavium offers a broad portfolio of integrated, software-compatible processors ranging in performance from 10 Mbps to 100 Gbps that enable secure, intelligent functionality in enterprise, data-center, broadband/consumer and access and service provider equipment. Cavium processors are supported by ecosystem partners that provide operating systems, tool support, reference designs and other services. Cavium's principal office is in San Jose, CA with design team locations in California, Massachusetts, India and China. For more information, please visit: http://www.cavium.com.
CAVIUM, INC. | ||||
Unaudited GAAP Condensed Consolidated Statements of Operations | ||||
(in thousands, except per share amounts) | ||||
Three Months Ended | ||||
December 31, 2012 | September 30, 2012 | |||
Net revenue | $ 66,369 | $ 61,081 | ||
Cost of revenue | 25,049 | 24,796 | ||
Gross profit | 41,320 | 36,285 | ||
Operating expenses: | ||||
Research and development | 29,318 | 27,444 | (a) | |
Sales, general and administrative | 21,608 | 19,213 | ||
Goodwill impairment | 27,680 | - | ||
Total operating expenses | 78,606 | 46,657 | ||
Loss from operations before other income (expense), income taxes and non-controlling interest | (37,286) | (10,372) | ||
Other income (expense), net: | ||||
Interest expense | (581) | (11) | ||
Other, net | (164) | 115 | (a) | |
Total other income (expense), net | (745) | 104 | ||
Loss before income taxes and non-controlliong interest | (38,031) | (10,268) | ||
Provision for (benefit from) income taxes | 41,415 | (1,719) | ||
Net loss | (79,446) | (8,549) | ||
Net loss attributable to non-controlling interest | (607) | (424) | (a) | |
Net loss attributable to the Company | $ (78,839) | $ (8,125) | ||
Net loss attributable to the Company per common share, basic | $ (1.56) | $ (0.16) | ||
Shares used in computing basic net loss per common share | 50,490 | 50,060 | ||
Net loss attributable to the Company per common share, diluted | $ (1.56) | $ (0.16) | ||
Shares used in computing diluted net loss per common share | 50,490 | 50,060 | ||
(a) Certain reclassifications were made from the reported statements of operations in the Form 10-Q filed on November 7, 2012 to properly account for the consolidation of a variable interest entity
| ||||
CAVIUM, INC. | ||||
Unaudited Reconciliation of Non-GAAP Adjustments | ||||
(in thousands) | ||||
Three Months Ended | ||||
Reconciliation of GAAP research and development expenses to non-GAAP: | December 31, 2012 | September 30, 2012 | ||
GAAP research and development expenses | $ 29,318 | $ 27,444 | ||
Stock-based compensation and related payroll taxes | (4,070) | (4,420) | ||
Acquisition and restructuring related expenses | (98) | (406) | ||
Acquisition and restructuring related compensation expenses | (249) | (76) | ||
Expenses associated from a variable interest entity | (2,880) | (1,259) | ||
Non-GAAP research and development expenses | $ 22,021 | $ 21,283 | ||
Reconciliation of GAAP sales, general and administrative expenses to non-GAAP | ||||
GAAP sales, general and administrative expenses | $ 21,608 | $ 19,213 | ||
Stock-based compensation and related payroll taxes | (4,091) | (4,326) | ||
Amortization of acquired intangible assets | (200) | (292) | ||
Acquisition and restructuring related expenses | (95) | (425) | ||
Acquisition and restructuring related compensation expenses | (40) | (119) | ||
Write-down of intangible assets | (5,570) | - | ||
Loss on disposition of certain consumer product assets | - | (2,728) | ||
Non-GAAP sales, general and administrative expenses | $ 11,612 | $ 11,323 | ||
CAVIUM, INC. | |||
Unaudited Reconciliation of Non-GAAP Adjustments | |||
(In thousands, except per share data and percentages) | |||
Three Months Ended | |||
December 31, 2012 | September 30, 2012 | ||
Reconciliation of GAAP gross profit & margin to non-GAAP: | |||
Net revenue | $ 66,369 | $ 61,081 | |
GAAP gross profit | 41,320 | 36,285 | |
GAAP gross margin | 62.3% | 59.4% | |
Acquisition and restructuring related expenses: | |||
Cost of revenue | (571) | (183) | |
Amortization of acquired intangible assets: | |||
Cost of revenue | 1,625 | 2,001 | |
Stock-based compensation and related payroll taxes: | |||
Cost of revenue | 432 | 491 | |
Non-GAAP gross profit | $ 42,806 | $ 38,594 | |
Non-GAAP gross margin | 64.5% | 63.2% | |
Three Months Ended | |||
December 31, 2012 | September 30, 2012 | ||
Reconciliation of GAAP loss from operations to non-GAAP income from operations: | |||
GAAP loss from operations | $ (37,286) | $ (10,372) | |
Amortization of acquired intangible assets | 1,825 | 2,293 | |
Stock-based compensation and related payroll taxes | 8,593 | 9,237 | |
Acquisition and restructuring related expenses | (378) | 648 | |
Acquisition and restructuring related compensation expenses | 289 | 195 | |
Write-down of intangible assets | 5,570 | - | |
Goodwill impairment | 27,680 | - | |
Loss on disposition of certain consumer product assets | - | 2,728 | |
Loss from operations of a variable interest entity | 2,880 | 1,259 | |
Non-GAAP income from operations | $ 9,173 | $ 5,988 | |
Non-GAAP income from operations as a percentage of revenue | 13.8% | 9.8% | |
Three Months Ended | |||
December 31, 2012 | September 30, 2012 | ||
Reconciliation of GAAP net loss to non-GAAP net income: | |||
GAAP net loss attributable to the Company | $ (78,839) | $ (8,125) | |
Non-GAAP adjustments: | |||
Stock-based compensation and related payroll taxes: | |||
Cost of revenue | 432 | 491 | |
Research and development | 4,070 | 4,420 | |
Sales, general and administrative | 4,091 | 4,326 | |
Amortization of acquired intangible assets: | |||
Cost of revenue | 1,625 | 2,001 | |
Sales, general and administrative | 200 | 292 | |
Acquisition and restructuring related expenses | (378) | 648 | |
Acquisition and restructuring related compensation expenses | 289 | 195 | |
Write-down of intangible assets | 5,570 | - | |
Goodwill impairment | 27,680 | - | |
Loss on disposition of certain consumer product assets | - | 2,728 | |
Net loss of a variable interest entity attributable to the Company | 2,396 | 835 | |
Valuation allowance on deferred tax assets | 43,505 | - | |
Total of non-GAAP adjustments | 89,480 | 15,936 | |
Non-GAAP net income | $ 10,641 | $ 7,811 | |
GAAP net loss attributable to the Company per share, diluted | $ (1.56) | $ (0.16) | |
Non-GAAP adjustments detailed above | 1.76 | 0.31 | |
Non-GAAP net income per share, diluted | $ 0.20 | $ 0.15 | |
GAAP weighted average shares, diluted | 50,490 | 50,060 | |
Non-GAAP share adjustment | 3,974 | 3,076 | |
Non-GAAP weighted average shares, diluted | 54,464 | 53,136 | |
CAVIUM, INC. | |||||
Unaudited GAAP Condensed Consolidated Balance Sheets | |||||
(in thousands) | |||||
As of | |||||
December 31, 2012 | September 30, 2012 | ||||
Assets | |||||
Current assets: | |||||
Cash and cash equivalents | $ 76,784 | $ 67,290 | |||
Accounts receivable, net | 33,567 | 32,964 | |||
Inventories | 46,508 | 44,089 | |||
Prepaid expenses and other current assets | 4,865 | 3,979 | |||
Assets held for sale | 2,609 | - | |||
Deferred tax assets | 568 | 5,604 | |||
Total current assets | 164,901 | 153,926 | |||
Property and equipment, net | 30,692 | 20,929 | |||
Intangible assets, net | 62,888 | 71,058 | |||
Goodwill | 71,478 | 101,329 | |||
Deferred tax assets, net of current | 449 | 39,969 | |||
Other non-current assets | 1,096 | 1,156 | |||
Total assets | $ 331,504 | $ 388,367 | |||
Liabilities and Stockholders' Equity | |||||
Current liabilities: | |||||
Accounts payable | $ 16,083 | $ 16,208 | |||
Accrued expenses and other current liabilities | 8,680 | 6,642 | |||
Deferred revenue | 12,944 | 13,864 | |||
Notes payable | 1,012 | - | |||
Capital lease and technology license obligations, current | 16,500 | 10,163 | |||
Total current liabilities | 55,219 | 46,877 | |||
Notes payable, net of current portion | 4,000 | - | |||
Capital lease and technology license obligations, net of current | 24,832 | 20,733 | |||
Deferred tax liability | 2,421 | 5,946 | |||
Other non-current liabilities | 1,970 | 2,379 | |||
Total liabilities | 88,442 | 75,935 | |||
Stockholders' equity | |||||
Common stock | 51 | 50 | |||
Additional paid-in capital | 398,132 | 388,044 | (a) | ||
Accumulated deficit | (154,092) | (75,253) | |||
Total stockholders' equity attributable to the Company | 244,091 | 312,841 | |||
Non-controlling interest | (1,029) | (409) | (a) | ||
Total equity | 243,062 | 312,432 | |||
Total liabilities and stockholders' equity | $ 331,504 | $ 388,367 | |||
(a) Certain reclassifications were made from the reported condensed balance sheet in the Form 10-Q filed on November 7, 2012 to properly account for the consolidation of a variable interest entity | |||||
CONTACT: Art Chadwick, Vice President of Finance and Administration and Chief Financial Officer, +1-408-943-7104, art.chadwick@cavium.com, or Angel Atondo, Senior Marketing Communications Manager, +1-408-943-7417, angel.atondo@cavium.com