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| 8-K - FORM 8-K FILING DOCUMENT - MINDSPEED TECHNOLOGIES, INC | document.htm |
EXHIBIT 99.1
Mindspeed Announces Fiscal Fourth Quarter 2013 Results and Conclusion of Its Strategic Review Process
- Beats Guidance and Achieves Non-GAAP Net Income Profitability
- High Performance Analog Revenue Grows 4% Sequentially
- Announces Definitive Merger Agreement with MACOM for $5.05 per share
NEWPORT BEACH, Calif., Nov. 5, 2013 (GLOBE NEWSWIRE) -- Mindspeed Technologies, Inc. (Nasdaq:MSPD), a leading supplier of semiconductor solutions for communications infrastructure applications, today reported results for its fiscal fourth quarter of 2013. For the quarter ended September 27, 2013, Mindspeed recorded net revenue of $36.0 million and earnings per share of $0.02 on a non-GAAP basis, and a loss per share of $1.26 on a GAAP basis. Mindspeed has also concluded the strategic review process it announced on April 30, 2013. In a separate release, Mindspeed has announced the signing of a definitive agreement to be acquired by M/A-COM Technology Solutions Holdings, Inc. (Nasdaq:MTSI) ("MACOM") for $5.05 per share. Details can be found in a separate release at the following link: http://investors.mindspeed.com/releases.cfm.
"After a thorough review by Mindspeed's Board and management team, and spearheaded by Morgan Stanley, we are excited to conclude the strategic review process with an outcome that we believe maximizes the value for shareholders, while at the same time positions the two entities with very strong technology platforms in the analog industry and deep customer relationships," commented Raouf Y. Halim, chief executive officer at Mindspeed. "Furthermore, the Mindspeed team was able to beat our forecast for the fourth quarter, including net income profitability on a non-GAAP basis. I would like to publicly commend everybody at Mindspeed for a job well-done not only in the past quarter, but also over the past decade."
Revenue from high-performance analog (HPA) products was $15.9 million, or 44 percent of fiscal fourth quarter 2013 net revenue, and was up 4% percent versus the prior fiscal quarter. Revenue from communications processors was $16.2 million, or 45 percent of net revenue, and was down approximately 8 percent versus the prior fiscal quarter. Wireless infrastructure revenue contributed $4.0 million in the quarter, or approximately 11 percent of total revenue, and was up 49 percent versus the prior fiscal quarter.
Non-GAAP operating profit for the fiscal fourth quarter of 2013 was approximately $1.6 million, compared to a non-GAAP operating profit of $644,000 in the prior fiscal quarter. GAAP operating loss for the fiscal fourth quarter of 2013 was $50.9 million, due primarily to an impairment charge related to the wireless infrastructure assets, compared to a GAAP operating loss of $3.5 million in the prior fiscal quarter. Non-GAAP net income for the fiscal fourth quarter of 2013 was $874,000, or $0.02 per share, compared to a non-GAAP net loss of $461,000, or $0.01 per share, in the prior fiscal quarter. GAAP net loss in the fiscal fourth quarter of 2013 was $51.8 million, or $1.26 per share, compared to GAAP net income of $1.6 million, or $0.04 per share, in the prior fiscal quarter.
Non-GAAP results exclude goodwill and asset impairment charges, stock-based compensation and related payroll costs, strategic alternatives process costs, restructuring charges, amortization of acquired intangible assets and non-cash interest expense on convertible senior notes, among other items. Reconciliations of the non-GAAP measures to GAAP measures are included in the accompanying financial data.
Due to the announcement of the definitive merger agreement with MACOM, Mindspeed will not conduct a conference call today to discuss its fiscal fourth quarter of 2013 results.
About Mindspeed Technologies
Mindspeed Technologies (Nasdaq:MSPD) is a leading provider of network infrastructure semiconductor solutions to the communications industry. The company's low-power system-on-chip (SoC) products are helping to drive video, voice and data applications in worldwide fiber-optic networks and enable advanced processing for 3G and long-term evolution (LTE) mobile networks. The company's high-performance analog products are used in a variety of optical, enterprise, industrial and video transport systems. Mindspeed's products are sold to original equipment manufacturers (OEMs) around the globe.
To learn more, please visit www.mindspeed.com. Company news and updates are also posted at www.twitter.com/mindspeed.
Non-GAAP Measures
We provide non-GAAP measures as a supplement to financial results based on GAAP. A detailed reconciliation of the non-GAAP results to the most directly comparable GAAP measures is set forth below under the heading "Reconciliation of Non-GAAP Measures to GAAP Measures." Investors are encouraged to review the accompanying press release reconciliations. We believe the presentation of non-GAAP measures provides investors with additional insight into underlying operating results and prospects for the future by excluding goodwill and asset impairments, as well as stock-based compensation and related payroll costs, profit in acquired inventory, amortization of acquired intangible assets, non-recurring legal and settlement costs, strategic alternatives process costs, employee separation costs, acquisition-related costs, integration costs, revaluation of contingent consideration, purchase price adjustments, other income from the picoChip settlement agreement, restructuring charges and/or non-cash interest expense on our convertible senior notes. We have historically reported similar financial measures and believe that the inclusion of comparative numbers provides consistency in our financial reporting.
We also discuss certain non-GAAP measures excluding patent sales as a supplement to financial results based on GAAP. The sale of patents in the fiscal first quarter of 2013 impacted our net revenue, gross margin, operating income and net income.
We use non-GAAP gross margin, research and development expenses, selling, general and administrative expenses, operating expenses, operating income, other expense, net, net income and net income per share internally to evaluate our operating performance and to determine certain components of management compensation. In addition, we use these non-GAAP measures for internal budgets and forecasts. We believe that these non-GAAP measures can be useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making.
We exclude stock-based compensation and related payroll costs and non-cash interest expense on our convertible senior notes from non-GAAP measures because we believe that excluding these costs can enhance the understanding of our performance. We exclude profit in acquired inventory to facilitate comparability of gross profit between periods and to better reflect continuing operations of the acquired company. We exclude employee separation costs, non-recurring legal and settlement costs, strategic alternatives process costs, restructuring charges, acquisition-related costs, integration costs, purchase price adjustments, other income from the picoChip settlement agreement and revaluation of contingent consideration because they include significant discrete items that may not be indicative of our ongoing operations or economic performance. Similarly, we have excluded goodwill and asset impairment charges related to our wireless infrastructure reporting unit because they involve non-cash items that relate to historic imputed valuations of the reporting unit's business and assets and are not indicative of its operating or economic performance.
We do not provide forward-looking GAAP measures or a reconciliation of the forward-looking non-GAAP measures to GAAP measures because of our inability to project restructuring charges, employee separation costs and stock-based compensation and related payroll costs.
The non-GAAP financial measures we provide have certain limitations because they do not reflect all of the costs associated with the operation of our business as determined in accordance with GAAP. The non-GAAP measures are in addition to, and not a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP and may be different from non-GAAP measures used by other companies. We endeavor to compensate for the limitations of these non-GAAP measures by providing GAAP financial statements, descriptions of the reconciling items and a reconciliation of the non-GAAP measures to the most directly comparable GAAP measures so that investors can appropriately incorporate the non-GAAP measures and their limitations into their analyses. For complete information on goodwill and asset impairments, stock-based compensation and related payroll costs, profit in acquired inventory, amortization of acquired intangible assets, non-recurring legal and settlement costs, strategic alternatives process costs, employee separation costs, restructuring charges, acquisition-related costs, integration costs, other income from the picoChip settlement agreement, revaluation of contingent consideration and non-cash interest expense on our convertible senior notes, please see our financial statements and "Management's Discussion and Analysis of Results of Operations and Financial Condition" that will be included in the periodic report we expect to file with the SEC with respect to the financial periods discussed herein.
Safe Harbor Statement
This press release contains forward-looking statements based on Mindspeed's beliefs and assumptions and on information currently available to our management. Forward-looking statements include, in addition to statements relating to Mindspeed's business, financial results and prospects, statements concerning the MACOM transaction, including those regarding the potential date of closing of the acquisition; the potential for the divestiture of Mindspeed's wireless business; potential benefits and synergies; and other financial and business expectations. Forward-looking statements include all statements that are not historical facts and generally may be identified by terms such as "anticipates," "believes," "could," "estimates," "expects," "intends," "may," "plans," "potential," "predicts," "projects," "seeks," "should," "will," "would" or similar expressions and the negatives of those terms.
Forward-looking statements contained in this press release reflect Mindspeed's current views about future events and are subject to risks, uncertainties, assumptions and changes in circumstances that may cause those events or our actual activities or results to differ materially from those expressed in any forward-looking statement. Although Mindspeed believes that the expectations reflected in the forward-looking statements are reasonable, it cannot and does not guarantee future events, results, actions, levels of activity, performance or achievements. For example, there can be no assurances with respect to either the closing of the Macom transaction or a divestiture of Mindspeed's wireless business. Readers are cautioned not to place undue reliance on these forward-looking statements. A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements, including, among others, the potential that the tender offer will not be successfully completed; the lack of a binding agreement with respect to the divestiture of Mindspeed's wireless business to a proposed third party and the risk that the divestiture may not be completed; matters arising in connection with the parties' efforts to comply with and satisfy applicable regulatory approvals and closing conditions relating to the transaction; failure to achieve expected synergies and other anticipated benefits of the transaction; and other risks and uncertainties generally affecting Mindspeed's business, including fluctuations in our operating results and the potential for future operating losses; loss of or diminished demand from one or more key distributors; our ability to develop and introduce new products successfully; pricing pressures; whether we continue to sustain losses and consume cash in our operations; customer and employee uncertainty arising from the announcement of the transaction with Macom and the potential divestiture of our wireless business; and the potential for intellectual property or other litigation. Additional risks and uncertainties that could cause our actual results to differ from those set forth in any forward-looking statements are discussed in more detail under the caption "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended September 28, 2012, our most recent Quarterly Report on Form 10-Q, and our future filings with the Securities and Exchange Commission.
| MINDSPEED TECHNOLOGIES, INC. | |||||
| CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS | |||||
| (unaudited, in thousands, except per share amounts) | |||||
| Three Months Ended | Year Ended | ||||
| September 27, | June 28, | September 28, | September 27, | September 28, | |
| 2013 | 2013 | 2012 | 2013 | 2012 | |
| Net revenue: | |||||
| Products | $ 36,043 | $ 35,579 | $ 36,264 | $ 145,401 | $ 140,415 |
| Intellectual property | -- | -- | -- | 6,000 | 591 |
| Total net revenue | 36,043 | 35,579 | 36,264 | 151,401 | 141,006 |
| Cost of goods sold: | |||||
| Products (a) | 13,794 | 13,776 | 15,253 | 56,859 | 59,112 |
| Asset impairments (b) | 21,151 | -- | -- | 23,571 | 3,385 |
| Total cost of goods sold | 34,945 | 13,776 | 15,253 | 80,430 | 62,497 |
| Gross margin | 1,098 | 21,803 | 21,011 | 70,971 | 78,509 |
| Operating expenses: | |||||
| Research and development (a) (b) | 15,027 | 15,153 | 17,093 | 61,883 | 67,946 |
| Selling, general and administrative (a) | 9,282 | 9,823 | 9,297 | 38,886 | 43,317 |
| Goodwill impairment charge (b) | 26,596 | -- | -- | 57,062 | -- |
| Impairment of intangible assets (b) | 1,146 | -- | -- | 1,646 | -- |
| Acquisition-related costs | -- | 26 | 29 | 216 | 3,777 |
| Restructuring charges | (79) | 293 | 704 | 2,462 | 2,054 |
| Total operating expenses | 51,972 | 25,295 | 27,123 | 162,155 | 117,094 |
| Operating loss | (50,874) | (3,492) | (6,112) | (91,184) | (38,585) |
| Other (expense)/income, net | (791) | 5,148 | 22 | 2,423 | 6,193 |
| (Loss)/income before income taxes | (51,665) | 1,656 | (6,090) | (88,761) | (32,392) |
| Provision/(benefit) for income taxes | 105 | 57 | (28) | 387 | 359 |
| Net (loss)/income | $ (51,770) | $ 1,599 | $ (6,062) | $ (89,148) | $ (32,751) |
| Net (loss)/income per share: | |||||
| Basic | $ (1.26) | $ 0.04 | $ (0.15) | $ (2.21) | $ (0.89) |
| Diluted | $ (1.26) | $ 0.04 | $ (0.15) | $ (2.21) | $ (0.89) |
| Weighted-average number of shares used in per share computation: | |||||
| Basic | 40,950 | 40,575 | 39,169 | 40,285 | 36,787 |
| Diluted | 40,950 | 40,929 | 39,169 | 40,285 | 36,787 |
| (a) Includes stock-based compensation expense and related payroll costs. | |||||
| (b) During the second quarter of fiscal 2013, we performed an evaluation of goodwill, definite-lived intangible assets and indefinite-lived intangible assets as we believed there was an impairment triggering circumstance which warranted an evaluation. This circumstance was the slower than expected deployments of 3G small cell base stations. As a result, we recorded a charge for the impairment of goodwill, definite-lived intangible assets and indefinite-lived intangibles of $33.4 million related to our wireless infrastructure reporting unit. The impairment charge for the definite-lived intangible assets was included in cost of goods sold. During the fourth quarter of fiscal 2013, we performed our annual evaluation of goodwill and indefinite-lived intangible assets and concluded that goodwill was impaired. During the fourth quarter of fiscal 2013, there were indicators of impairment that required us to evaluate the long-lived assets for recoverability. As a result, we recorded a charge for the impairment of goodwill of $26.6 million and a charge for the impairment of definite-lived intangibles of $22.4 million related to our wireless infrastructure reporting unit. | |||||
| MINDSPEED TECHNOLOGIES, INC. | |||||
| Reconciliation of Non-GAAP Measures to GAAP Measures | |||||
| (unaudited, in thousands, except per share amounts) | |||||
| Three Months Ended | Year Ended | ||||
| September 27, | June 28, | September 28, | September 27, | September 28, | |
| 2013 | 2013 | 2012 | 2013 | 2012 | |
| Reconciliation of Non-GAAP Gross Margin to GAAP Gross Margin | |||||
| Non-GAAP gross margin | $ 22,582 | $ 22,048 | $ 21,372 | $ 95,723 | $ 83,661 |
| Items excluded from non-GAAP gross margin: | |||||
| Asset impairments (b) | 21,151 | -- | -- | 23,571 | 3,385 |
| Stock-based compensation and related payroll costs | 91 | (2) | 91 | 198 | 138 |
| Profit in acquired inventory (c) | -- | -- | 24 | -- | 986 |
| Amortization of acquired intangible assets (d) | 242 | 247 | 246 | 983 | 643 |
| Gross margin | $ 1,098 | $ 21,803 | $ 21,011 | $ 70,971 | $ 78,509 |
| Reconciliation of Non-GAAP Research and Development Expenses to GAAP Research and Development Expenses | |||||
| Non-GAAP research and development expenses | $ 14,288 | $ 14,445 | $ 16,128 | $ 58,144 | $ 63,949 |
| Items excluded from non-GAAP research and development expenses: | |||||
| Stock-based compensation and related payroll costs | 630 | 886 | 942 | 3,474 | 3,727 |
| Asset impairments (b) | 104 | -- | -- | 239 | -- |
| Employee separation costs (e) | 5 | (178) | 23 | 26 | 270 |
| Research and development expenses | $ 15,027 | $ 15,153 | $ 17,093 | $ 61,883 | $ 67,946 |
| Reconciliation of Non-GAAP Selling, General and Administrative Expenses to GAAP Selling, General and Administrative Expenses | |||||
| Non-GAAP selling, general and administrative expenses | $ 6,648 | $ 6,959 | $ 7,235 | $ 28,382 | $ 32,802 |
| Items excluded from non-GAAP selling, general and administrative expenses: | |||||
| Stock-based compensation and related payroll costs | 2,188 | 2,163 | 848 | 8,248 | 6,880 |
| Amortization of acquired intangible assets (d) | 77 | 104 | 104 | 389 | 275 |
| Non-recurring legal and settlement costs | (92) | 306 | 715 | 1,105 | 715 |
| Strategic alternatives process costs (f) | 439 | 268 | -- | 707 | -- |
| Employee separation costs (e) | 22 | 23 | 169 | 75 | 426 |
| Integration costs (g) | -- | -- | 226 | (20) | 2,219 |
| Selling, general and administrative expenses | $ 9,282 | $ 9,823 | $ 9,297 | $ 38,886 | $ 43,317 |
| MINDSPEED TECHNOLOGIES, INC. | |||||
| Reconciliation of Non-GAAP Measures to GAAP Measures | |||||
| (unaudited, in thousands, except per share amounts) | |||||
| Three Months Ended | Year Ended | ||||
| September 27, | June 28, | September 28, | September 27, | September 28, | |
| 2013 | 2013 | 2012 | 2013 | 2012 | |
| Reconciliation of Non-GAAP Operating Expenses to GAAP Operating Expenses | |||||
| Non-GAAP operating expenses | $ 20,936 | $ 21,404 | $ 23,363 | $ 86,526 | $ 96,751 |
| Items excluded from non-GAAP operating expenses: | |||||
| Asset impairments (b) | 1,250 | -- | -- | 1,385 | -- |
| Goodwill impairment charge (b) | 26,596 | -- | -- | 57,062 | -- |
| Asset impairment - indefinite-lived intangibles (b) | -- | -- | -- | 500 | -- |
| Stock-based compensation and related payroll costs | 2,818 | 3,049 | 1,790 | 11,722 | 10,607 |
| Acquisition-related costs (h) | -- | 26 | 29 | 216 | 3,777 |
| Restructuring charges | (79) | 293 | 704 | 2,462 | 2,054 |
| Amortization of acquired intangible assets (d) | 77 | 104 | 104 | 389 | 275 |
| Non-recurring legal and settlement costs | (92) | 306 | 715 | 1,105 | 715 |
| Strategic alternatives process costs (f) | 439 | 268 | -- | 707 | -- |
| Employee separation costs (e) | 27 | (155) | 192 | 101 | 696 |
| Integration costs (g) | -- | -- | 226 | (20) | 2,219 |
| Operating expenses | $ 51,972 | $ 25,295 | $ 27,123 | $ 162,155 | $ 117,094 |
| Reconciliation of Non-GAAP Operating Income/(Loss) to GAAP Operating Loss | |||||
| Non-GAAP operating income/(loss) | $ 1,646 | $ 644 | $ (1,991) | $ 9,197 | $ (13,090) |
| Items excluded from non-GAAP operating income/(loss): | |||||
| Asset impairments (b) | 22,401 | -- | -- | 24,956 | 3,385 |
| Goodwill impairment charge (b) | 26,596 | -- | -- | 57,062 | -- |
| Asset impairment - indefinite-lived intangibles (b) | -- | 500 | |||
| Stock-based compensation and related payroll costs | 2,909 | 3,047 | 1,881 | 11,920 | 10,745 |
| Acquisition-related costs (h) | -- | 26 | 29 | 216 | 3,777 |
| Restructuring charges | (79) | 293 | 704 | 2,462 | 2,054 |
| Profit in acquired inventory (c) | -- | -- | 24 | -- | 986 |
| Amortization of acquired intangible assets (d) | 319 | 351 | 350 | 1,372 | 918 |
| Non-recurring legal and settlement costs | (92) | 306 | 715 | 1,105 | 715 |
| Strategic alternatives process costs (f) | 439 | 268 | -- | 707 | -- |
| Employee separation costs (e) | 27 | (155) | 192 | 101 | 696 |
| Integration costs (g) | -- | -- | 226 | (20) | 2,219 |
| Operating loss | $ (50,874) | $ (3,492) | $ (6,112) | $ (91,184) | $ (38,585) |
| Reconciliation of Non-GAAP Other Expense, Net to GAAP Other (Expense)/Income, Net | |||||
| Non-GAAP other (expense)/income, net | $ (667) | $ (1,048) | $ (663) | $ (3,195) | $ (1,458) |
| Items excluded from non-GAAP other expense, net: | |||||
| Purchase price adjustments (j) | -- | -- | -- | (92) | -- |
| Other income from picoChip settlement agreement (k) | -- | 6,382 | -- | 6,382 | -- |
| Revaluation of contingent consideration | -- | -- | 885 | 10 | 8,162 |
| Non-cash interest expense on convertible senior notes (i) | (124) | (186) | (200) | (682) | (511) |
| Other (expense)/income, net | $ (791) | $ 5,148 | $ 22 | $ 2,423 | $ 6,193 |
| MINDSPEED TECHNOLOGIES, INC. | |||||
| Reconciliation of Non-GAAP Measures to GAAP Measures | |||||
| (unaudited, in thousands, except per share amounts) | |||||
| Three Months Ended | Year Ended | ||||
| September 27, | June 28, | September 28, | September 27, | September 28, | |
| 2013 | 2013 | 2012 | 2013 | 2012 | |
| Reconciliation of Non-GAAP Net Income/(Loss) to GAAP Net (Loss)/Income | |||||
| Non-GAAP net income/(loss) | $ 874 | $ (461) | $ (2,626) | $ 5,615 | $ (14,907) |
| Items excluded from non-GAAP net income/(loss): | |||||
| Asset impairments (b) | 22,401 | -- | -- | 24,956 | 3,385 |
| Goodwill impairment charge (b) | 26,596 | -- | -- | 57,062 | -- |
| Asset impairment - indefinite-lived intangibles (b) | -- | -- | -- | 500 | -- |
| Stock-based compensation and related payroll costs | 2,909 | 3,047 | 1,881 | 11,920 | 10,745 |
| Acquisition-related costs (h) | -- | 26 | 29 | 216 | 3,777 |
| Restructuring charges | (79) | 293 | 704 | 2,462 | 2,054 |
| Profit in acquired inventory (c) | -- | -- | 24 | -- | 986 |
| Amortization of acquired intangible assets (d) | 319 | 351 | 350 | 1,372 | 918 |
| Non-recurring legal and settlement costs | (92) | 306 | 715 | 1,105 | 715 |
| Strategic alternatives process costs (f) | 439 | 268 | -- | 707 | -- |
| Employee separation costs (e) | 27 | (155) | 192 | 101 | 696 |
| Integration costs (g) | -- | -- | 226 | (20) | 2,219 |
| Purchase price adjustments (j) | -- | -- | -- | 92 | -- |
| Other income from picoChip settlement agreement (k) | -- | (6,382) | -- | (6,382) | -- |
| Revaluation of contingent consideration | -- | -- | (885) | (10) | (8,162) |
| Non-cash interest expense on convertible senior notes (i) | 124 | 186 | 200 | 682 | 511 |
| Net (loss)/income | $ (51,770) | $ 1,599 | $ (6,062) | $ (89,148) | $ (32,751) |
| Reconciliation of Non-GAAP Net Income/(Loss) Per Share to GAAP Net (Loss)/Income Per Share | |||||
| Basic: | |||||
| Non-GAAP net income/(loss) per share | $ 0.02 | $ (0.01) | $ (0.07) | $ 0.14 | $ (0.41) |
| Adjustments | (1.28) | 0.05 | (0.08) | (2.35) | (0.48) |
| Net (loss)/income per share | $ (1.26) | $ 0.04 | $ (0.15) | $ (2.21) | $ (0.89) |
| Diluted: | |||||
| Non-GAAP net income/(loss) per share | $ 0.02 | $ (0.01) | $ (0.07) | $ 0.14 | $ (0.41) |
| Adjustments | (1.28) | 0.05 | (0.08) | (2.35) | (0.48) |
| Net (loss)/income per share | $ (1.26) | $ 0.04 | $ (0.15) | $ (2.21) | $ (0.89) |
| Reconciliation of Shares used in Non-GAAP diluted shares to GAAP diluted shares | |||||
| Non-GAAP diluted shares | 41,325 | 40,575 | 39,169 | 40,903 | 36,787 |
| The effect of dilutive potential common shares due to reporting Non-GAAP net income | (375) | 354 | -- | (618) | -- |
| Diluted shares | 40,950 | 40,929 | 39,169 | 40,285 | 36,787 |
| (c) Profit in acquired inventory results from purchase-accounting adjustments which increase the value of inventory acquired to its fair value. As the acquired inventory is sold, the associated profit in acquired inventory increases cost of goods sold and reduces gross profit. | |||||
| (d) Amortization of acquired intangible assets reflects amortization expense on intangible assets recorded in conjunction with the picoChip acquisition. | |||||
| (e) Employee separation costs consist of severance benefits payable to certain former employees of the Company as a result of organizational changes. | |||||
| (f) Strategic alternatives process costs represent fees incurred in the Company's evaluation of strategic alternatives. | |||||
| (g) Integration costs represent costs incurred related to the transition of picoChip to a wholly owned subsidiary of Mindspeed. | |||||
| (h) Acquisition-related costs are professional fees incurred related to the acquisition of picoChip. | |||||
| (i) Non-cash interest expense on convertible senior notes represents the amortization of debt discounts recorded in accordance with FASB ASC 470-20, related to the Company's 6.50% and 6.75% convertible senior notes. | |||||
| (j) Purchase price adjustments consist of adjustments to amounts recognized in the picoChip acquisition that occurred after the measurement period. | |||||
| (k) Other income from the picoChip settlement agreement was recorded as a result of a settlement the Company reached with the picoChip selling shareholders' representative to relieve the parties of all outstanding obligations under the picoChip acquisition agreement. | |||||
| MINDSPEED TECHNOLOGIES, INC. | ||
| CONSOLIDATED CONDENSED BALANCE SHEETS | ||
| (unaudited, in thousands) | ||
| September 27, | September 28, | |
| 2013 | 2012 | |
| ASSETS | ||
| Current Assets | ||
| Cash and cash equivalents | $ 25,974 | $ 49,098 |
| Receivables, net | 19,633 | 14,527 |
| Inventories | 11,267 | 10,482 |
| Prepaid expenses and other current assets | 4,429 | 10,497 |
| Total current assets | 61,303 | 84,604 |
| Property, plant and equipment, net | 15,621 | 16,031 |
| Intangible assets, net | 9,677 | 35,351 |
| Goodwill | -- | 57,110 |
| Other assets | 4,723 | 4,000 |
| Total assets | $ 91,324 | $ 197,096 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Current Liabilities | ||
| Accounts payable | $ 6,999 | $ 9,262 |
| Accrued compensation and benefits | 5,629 | 6,401 |
| Accrued income taxes | 512 | 707 |
| Deferred income on sales to distributors | 3,405 | 4,396 |
| Deferred revenue | 2,308 | 2,338 |
| Restructuring | 141 | 427 |
| Line of credit - short-term | 4,484 | 5,511 |
| Short-term debt | 2,250 | 15,384 |
| Contingent consideration | -- | 1,876 |
| Other current liabilities | 4,848 | 9,527 |
| Total current liabilities | 30,576 | 55,829 |
| Line of credit - long-term | 8,000 | 8,000 |
| Long-term debt | 42,832 | 44,765 |
| Other liabilities | 6,158 | 6,767 |
| Total liabilities | 87,566 | 115,361 |
| Stockholders' Equity | 3,758 | 81,735 |
| Total liabilities and stockholders' equity | $ 91,324 | $ 197,096 |
| MINDSPEED TECHNOLOGIES, INC. | ||
| CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS | ||
| (unaudited, in thousands) | ||
| Year Ended | ||
| September 27, | September 28, | |
| 2013 | 2012 | |
| Cash Flows From Operating Activities | ||
| Net loss | $ (89,148) | $ (32,751) |
| Adjustments required to reconcile net loss to net cash provided/(used in) by operating activities: | ||
| Depreciation and amortization of property, plant and equipment | 5,853 | 6,345 |
| Amortization of intangible assets | 3,403 | 3,419 |
| Asset impairments | 24,956 | 3,385 |
| Revaluation of contingent consideration | (10) | (8,162) |
| Restructuring charges | 2,462 | 2,054 |
| Goodwill impairment charge | 57,062 | -- |
| Impairment of indefinite-lived intangible assets | 500 | -- |
| Stock-based compensation | 11,731 | 10,505 |
| Provision for bad debt | (8) | 48 |
| Inventory provisions | 1,486 | 1,266 |
| Amortization of debt discount and issuance costs | 1,032 | 625 |
| Non-cash effect of picoChip settlement arrangement | (5,357) | -- |
| Other non-cash items, net | (38) | (211) |
| Changes in assets and liabilities, net of acquisitions: | ||
| Receivables | (5,099) | 217 |
| Inventories | (2,271) | 4,407 |
| Other assets, net | 3,793 | (4,141) |
| Accounts payable | (2,610) | 194 |
| Deferred income on sales to distributors | (991) | (950) |
| Accrued restructuring charges | (2,747) | (2,573) |
| Accrued compensation and benefits | (714) | (4,060) |
| Accrued expenses and other current liabilities | 131 | (1,888) |
| Other liabilities, net | (774) | 5,513 |
| Net cash provided by/(used in) operating activities | 2,642 | (16,758) |
| Cash Flows From Investing Activities | ||
| Purchases of property, plant and equipment | (4,542) | (4,637) |
| Payments under license agreements | (3,735) | (13,030) |
| Net cash paid for acquired companies | -- | (20,096) |
| Net cash used in investing activities | (8,277) | (37,763) |
| Cash Flows From Financing Activities | ||
| Payments made on capital lease obligations | (356) | (497) |
| Maturity and payment of convertible debt | (15,000) | -- |
| Borrowings under term loan | -- | 15,000 |
| Payments made on term loan | (750) | -- |
| Borrowings under line of credit | 1,420 | 16,808 |
| Payments made on line of credit | (2,447) | (3,297) |
| Borrowings under convertible debt | -- | 30,560 |
| Deferred financing costs | -- | (1,034) |
| Repurchase of restricted stock for income tax withholding | (1,567) | (1,213) |
| Proceeds from equity compensation programs | 1,215 | 2,074 |
| Net cash provided by financing activities | (17,485) | 58,401 |
| Effect of foreign currency exchange rates on cash | (4) | (9) |
| Net (decrease)/increase in cash and cash equivalents | (23,124) | 3,871 |
| Cash and cash equivalents at beginning of period | 49,098 | 45,227 |
| Cash and cash equivalents at end of period | $ 25,974 | $ 49,098 |
| MINDSPEED TECHNOLOGIES, INC. | |||||
| Selected Corporate Data | |||||
| (unaudited, in thousands) | |||||
| Three Months Ended | Year Ended | ||||
| September 27, | June 28, | September 28, | September 27, | September 28, | |
| 2013 | 2013 | 2012 | 2013 | 2012 | |
| Gross margin % | 3.0% | 61.3% | 57.9% | 46.9% | 55.7% |
| Cash provided by/(used in): | |||||
| Operating activities | $ 517 | $ (531) | $ (1,079) | $ 2,642 | $ (16,758) |
| Investing activities | (862) | (2,285) | (4,975) | (8,277) | (37,763) |
| Financing activities | (16,734) | (708) | (51) | (17,485) | 58,401 |
| Effect of foreign currency on cash | 6 | (2) | 65 | (4) | (9) |
| Net (decrease)/increase in cash | $ (17,073) | $ (3,526) | $ (6,040) | $ (23,124) | $ 3,871 |
| Depreciation and amortization | $ 1,396 | $ 1,349 | $ 1,552 | $ 5,853 | $ 6,345 |
| Amortization of intangible assets | $ 587 | $ 723 | $ 1,017 | $ 3,403 | $ 3,419 |
| Capital expenditures | $ 861 | $ 2,285 | $ 4,975 | $ 8,277 | $ 17,667 |
| Net cash paid for acquired companies | $ -- | $ -- | $ -- | $ -- | $ 20,096 |
| Net revenue by region: | |||||
| Americas | $ 6,085 | $ 8,598 | $ 5,942 | $ 32,913 | $ 23,848 |
| Europe, Middle East and Africa | 2,943 | 2,128 | 2,325 | 11,881 | 9,433 |
| Asia-Pacific | 27,015 | 24,853 | 27,997 | 106,607 | 107,725 |
| Total net revenue | $ 36,043 | $ 35,579 | $ 36,264 | $ 151,401 | $ 141,006 |
| Net revenue by product line: | |||||
| High-performance analog | $ 15,931 | $ 15,276 | $ 17,821 | $ 66,081 | $ 64,667 |
| Communications processors | 16,162 | 17,654 | 14,037 | 65,579 | 64,834 |
| Wireless infrastructure | 3,950 | 2,649 | 4,406 | 13,741 | 10,914 |
| Total net product revenue | 36,043 | 35,579 | 36,264 | 145,401 | 140,415 |
| Intellectual property | -- | -- | -- | 6,000 | 591 |
| Total net revenue | $ 36,043 | $ 35,579 | $ 36,264 | $ 151,401 | $ 141,006 |
CONTACT: Investor Relations Contact:
Mindspeed Technologies, Inc.
Kevin Trosian
VP, Corporate Development and Investor Relations
+1 949.579.3111
Investor.Relations@Mindspeed.com