Attached files
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| 8-K - FORM 8-K - BALLANTYNE STRONG, INC. | btn20150507b_8k.htm |
Exhibit 99.1
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Ballantyne Strong Reports Financial Results
for First Quarter of 2015
OMAHA, Nebraska (May 11, 2015) – Ballantyne Strong, Inc. (NYSE MKT: BTN), a diversified provider of digital technology services, products and solutions, today reported financial results for the first quarter ended March 31, 2015.
Net revenues were $22.5 million in the first quarter of 2015, compared with $22.0 million in the same period of the prior year.
Net loss totaled $10.2 million, or ($0.72) per share, in the first quarter of 2015, compared with a net loss of $594,000, or ($0.04) per share, in the same period of the prior year. Financial results for the first quarter of 2015 include a nonrecurring, non-cash charge totaling $10.1 million relating to a valuation allowance against the Company’s U.S. tax jurisdiction deferred tax assets.
Excluding the valuation allowance, adjusted net loss totaled $92,000, or ($0.01) per share, in the first quarter of 2015.
Chris Stark, President of Ballantyne Strong, commented, “We had a solid performance in the first quarter from our Systems Integration segment driven by strong sales of our screens and library management systems. However, this was offset by a weaker-than-expected performance from our Managed Services segment, as a result of slow conversion of customers from pilot programs to full deployments. We are highly focused on improving the Company’s overall performance and we are realigning and redeploying our resources to produce better results in the second half of the year. The management team is looking forward to working with the new composition of the Board to implement new strategies and ideas that will support improved performance and shareholder value.”
Q1 2015 Financial Summary
Managed Services revenues were $7.0 million in the first quarter of 2015, compared with $8.4 million in the same period of the prior year. The decrease is primarily attributable to lower project revenues in the digital media business.
Systems Integration revenues were $15.7 million in the first quarter of 2015, compared with $14.0 million in the same period of the prior year. The increase is primarily attributable higher sales of digital projectors in Asia, higher sales of library management systems, and higher sales of screens.
Consolidated gross profit was $4.3 million in the first quarter of 2015, compared with $4.2 million in the same quarter of the prior year. Gross margin was 19.0% in the first quarter of 2015, compared with 19.1% in the same quarter of the prior year.
Selling, general and administrative expenses (SG&A) were $5.5 million in the first quarter of 2015, compared with $5.4 million in the same quarter of the prior year. The increase in SG&A was primarily attributable to expenses related to the proxy contest.
Income tax expense was $9.7 million in the first quarter of 2015, which included a non-cash charge totaling $10.1 million relating to a valuation allowance against the Company’s U.S. tax jurisdiction deferred tax assets. The valuation allowance resulted from negative evidence in the form of operating losses in the U.S. in recent years. Should the Company’s taxable income increase in the future, it is possible that some or all of the valuation allowance against the deferred tax assets could be reversed. The company is taking actions to strengthen the profitability of U.S. operations to utilize these deferred tax assets and this will be a primary focus of management and the Board in the future.
Balance Sheet
Ballantyne’s cash and cash equivalents balance at March 31, 2015 was $23.9 million, an increase from the $22.5 million at the end of the prior quarter. The increase in cash and cash equivalents balance was primarily attributable to strong collections of accounts receivable and a refund relating to fiscal 2013 tax payments.
Conference Call and Webcast
A conference call to discuss 2015 first quarter financial results will be held on Monday, May 11, 2015 at 11:30 a.m. Eastern Time / 10:30 a.m. Central Time. Investors and analysts are invited to access the conference call by dialing 866-652-5200 (domestic) or 412-317-6060 (international), and referencing “Ballantyne Strong.” There will also be a live webcast of the call available at the Investor Relations section of http://www.strong-world.com.
After the live webcast, a replay will remain available in the Investor Relations section of Ballantyne Strong’s website. A replay of the call will be available at 877-344-7529 (domestic) or 412-317-0088 (international) through May 21, 2015, conference ID 10064990.
About Ballantyne Strong, Inc. (www.strong-world.com)
Ballantyne Strong designs, integrates, and installs technology solutions for a broad range of applications; develops and delivers out-of-home messaging, advertising and communications; manufactures projection screens and lighting products; and provides managed services including monitoring of networked equipment. The Company focuses on serving the retail, financial, government and cinema markets.
Forward-Looking Statements
Except for the historical information in this press release, it includes forward-looking statements that involve risks and uncertainties, including but not limited to, quarterly fluctuations in results; customer demand for the Company’s products; the development of new technology for alternate means of motion picture presentation; domestic and international economic conditions; the management of growth; and other risks detailed from time to time in the Company’s Securities and Exchange Commission filings. Actual results may differ materially from management’s expectations.
CONTACT:
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Nate Legband |
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Tony Rossi |
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Chief Financial Officer |
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Financial Profiles |
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402/829-9404 |
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310/622-8221 or trossi@finprofiles.com |
-tables follow-
Ballantyne Strong, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
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March 31, |
December 31, |
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(Unaudited) |
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Assets |
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Current assets: |
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Cash and cash equivalents |
$ | 23,882 | $ | 22,491 | ||||
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Accounts receivable (net of allowance for doubtful accounts of $690 and $679, respectively) |
15,099 | 20,266 | ||||||
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Inventories: |
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Finished goods, net |
9,710 | 11,195 | ||||||
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Work in process |
512 | 632 | ||||||
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Raw materials and components, net |
1,860 | 2,281 | ||||||
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Total inventories, net |
12,082 | 14,108 | ||||||
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Recoverable income taxes |
147 | 1,255 | ||||||
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Deferred income taxes |
996 | 3.541 | ||||||
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Other current assets |
3,315 | 2,956 | ||||||
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Total current assets |
55,521 | 64,617 | ||||||
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Property, plant and equipment (net of accumulated depreciation of $5,900 and $5,834, respectively) |
13,755 | 13,914 | ||||||
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Intangible assets, net |
1,037 | 1,168 | ||||||
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Goodwill |
943 | 1,029 | ||||||
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Notes receivable |
3,121 | 2,985 | ||||||
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Deferred income taxes |
— | 4,910 | ||||||
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Other assets |
1,145 | 1,447 | ||||||
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Total assets |
$ | 75,522 | $ | 90,070 | ||||
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Liabilities and Stockholders’ Equity |
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Current liabilities: |
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Accounts payable |
$ | 6,356 | $ | 9,039 | ||||
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Accrued expenses |
4,932 | 4,366 | ||||||
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Customer deposits/deferred revenue |
4,266 | 5,473 | ||||||
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Income tax payable |
690 | 1,009 | ||||||
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Total current liabilities |
16,244 | 19,887 | ||||||
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Deferred revenue |
1,986 | 2,230 | ||||||
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Deferred income taxes |
1,583 | 715 | ||||||
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Other accrued expenses, net of current portion |
1,422 | 1,776 | ||||||
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Total liabilities |
21,235 | 24,608 | ||||||
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Stockholders’ equity: |
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Preferred stock, par value $.01 per share; Authorized 1,000 shares, none outstanding |
— | — | ||||||
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Common stock, par value $.01 per share; Authorized 25,000 shares; issued 16,869 and 16,809 shares at March 31, 2015 and December 31, 2014, respectively; 14,138 and 14,078 shares outstanding at March 31, 2015 and December 31, 2014, respectively |
168 | 168 | ||||||
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Additional paid-in capital |
38,768 | 38,657 | ||||||
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Accumulated other comprehensive income: |
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Foreign currency translation |
(3,446 |
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(2,325 |
) | ||||
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Postretirement benefit obligations |
139 | 139 | ||||||
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Retained earnings |
36,897 | 47,062 | ||||||
| 72,526 | 83,701 | |||||||
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Less 2,731 of common shares in treasury, at cost at March 31, 2015 and December 31, 2014 |
(18,239 |
) |
(18,239 |
) | ||||
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Total stockholders’ equity |
54,287 | 65,462 | ||||||
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Total liabilities and stockholders’ equity |
$ | 75,522 | $ | 90,070 | ||||
Ballantyne Strong, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
Three Months Ended March 31, 2015 and 2014
(In thousands, except per share data)
(Unaudited)
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2015 |
2014 |
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Net product sales |
$ | 17,142 | $ | 14,834 | ||||
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Net service revenues |
5,328 | 7,187 | ||||||
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Total net revenues |
22,470 | 22,021 | ||||||
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Cost of products sold |
14,795 | 12,450 | ||||||
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Cost of services |
3,414 | 5,355 | ||||||
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Total cost of revenues |
18,209 | 17,805 | ||||||
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Gross profit |
4,261 | 4,216 | ||||||
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Selling and administrative expenses: |
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Selling |
1,677 | 1,546 | ||||||
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Administrative |
3,799 | 3,893 | ||||||
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Total selling and administrative expenses |
5,476 | 5,439 | ||||||
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Gain on sale or disposal of assets |
2 | 7 | ||||||
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Loss from operations |
(1,213 |
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(1,216 | ) | ||||
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Equity in income of joint venture |
— | 95 | ||||||
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Other income (expense): |
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Interest income |
164 | 177 | ||||||
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Interest expense |
(19 |
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(9 |
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Other income, net |
645 | 209 | ||||||
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Total other income |
790 | 377 | ||||||
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Loss before income taxes |
(423 |
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(744 | ) | ||||
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Income tax (expense) benefit |
(9,741 | ) | 150 | |||||
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Net loss |
$ | (10,164 |
) |
$ | (594 | ) | ||
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Basic earnings (loss) per share |
$ | (0.72 |
) |
$ | (0.04 | ) | ||
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Diluted loss per share |
$ | (0.72 |
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$ | (0.04 | ) | ||
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Weighted average shares outstanding: |
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Basic |
14,091 | 14,026 | ||||||
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Diluted |
14,091 | 14,026 | ||||||
Ballantyne Strong, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
Three Months Ended March 31, 2015 and 2014
(In thousands)
(Unaudited)
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2015 |
2014 |
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Cash flows from operating activities: |
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Net loss |
$ | (10,164 |
) |
$ | (594 | ) | ||
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Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
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Provision for doubtful accounts |
18 | 69 | ||||||
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Provision for obsolete inventory |
(49 |
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(8 | ) | ||||
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Provision for warranty |
99 | (134 | ) | |||||
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Depreciation and amortization |
569 | 434 | ||||||
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Equity in income of joint venture |
— | (95 | ) | |||||
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Loss on forward contracts |
— | 348 | ||||||
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Gain on disposal or transfer of assets |
(2 |
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(7 | ) | ||||
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Deferred income taxes |
8,692 | 519 | ||||||
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Share-based compensation expense |
111 | 101 | ||||||
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Changes in operating assets and liabilities, net of effect of acquisitions: |
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Accounts receivable, unbilled and notes receivable |
5,062 | 3,709 | ||||||
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Inventories |
1,920 | (179 |
) | |||||
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Other current assets |
(410 |
) |
(200 | ) | ||||
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Accounts payable |
(2,651 |
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(3,314 |
) | ||||
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Accrued expenses |
(480 |
) |
(1,343 |
) | ||||
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Customer deposits/deferred revenue |
(1,448 |
) |
(208 |
) | ||||
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Current income taxes |
849 | (1,599 |
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Other assets |
10 | (56 | ) | |||||
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Net cash provided by (used in) operating activities |
2,126 | (2,557 | ) | |||||
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Cash flows from investing activities: |
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Capital expenditures |
(161 |
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(258 |
) | ||||
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Proceeds from sales of assets |
5 | 56 | ||||||
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Net cash used in investing activities |
(156 |
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(202 |
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Cash flows from financing activities: |
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Payments on capital lease obligations |
(14 | ) | — | |||||
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Excess tax benefits from share-based arrangements |
19 | — | ||||||
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Net cash used in financing activities |
5 | — | ||||||
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Effect of exchange rate changes on cash and cash equivalents |
(584 |
) |
(541 |
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Net increase (decrease) in cash and cash equivalents |
1,391 | (3,300 | ) | |||||
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Cash and cash equivalents at beginning of period |
22,491 | 28,791 | ||||||
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Cash and cash equivalents at end of period |
$ | 23,882 | $ | 25,491 | ||||
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Supplemental disclosure of non-cash investing and financing activities: |
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Capital lease obligations for property and equipment |
$ | 226 | $ | — | ||||
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Reconciliation of Non-GAAP Financial Measures
Adjusted Net Loss and Adjusted EPS Reconciliation
Adjusted net loss and adjusted EPS are non-GAAP measures. The Company believes these measures provide a useful indication of profitability and basis for assessing the operations of the Company without the impact of deferred tax asset valuation allowance.
Adjusted net loss should not be considered in isolation or as a substitute for net loss or other profitability metrics prepared in accordance with GAAP. Adjusted net loss, as presented, may not be comparable to similarly titled measures of other companies.
Set forth below is a reconciliation of net loss to adjusted net loss. There were no similar items noted during the three months ended March 31, 2014.
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Unaudited, in thousands except per share |
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Three months ended March 31, 2015 |
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Net loss |
$ | (10,164 |
) | |
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Deferred tax valuation allowance |
7,659 | |||
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Change in foreign tax treatment due to valuation allowance |
2,413 | |||
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Adjusted net loss |
$ | (92 | ) | |
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Basic and diluted shares outstanding |
14,091 | |||
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Adjusted EPS-basic and diluted |
$ | (0.01 | ) | |
7