Delaware | 1-13317 | 13-3460176 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||
1351 S. Sunset Street, Longmont, CO 80501 | ||||
(Address of principal executive offices) (Zip Code) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 | Results of Operations and Financial Condition. |
Item 9.01 | Financial Statements and Exhibits. |
(d) | Exhibits. |
Exhibit No. | Description | |
99.1 | Press Release of Dot Hill Systems Corp. dated August 8, 2013. |
DOT HILL SYSTEMS CORP. | ||
By: | /s/ Hanif I. Jamal | |
Hanif I. Jamal | ||
Senior Vice President, Chief Financial Officer and Secretary |
Exhibit No. | Description | |
99.1 | Press Release of Dot Hill Systems Corp. dated August 8, 2013. |
• | Total non-GAAP net revenue was $51.2 million compared to $44.9 million for the first quarter of 2013 and $47.7 million for the second quarter of 2012; |
• | Net revenue from vertical markets grew 55% sequentially and 106% on a year-over-year basis; |
• | Non-GAAP gross margin was 34.7% compared to 32.1% for the first quarter 2013 and 27.4% for the second quarter 2012, and the highest gross margin in over eight years; |
• | Operating expenses declined slightly compared to first quarter 2013 and second quarter 2012; |
• | Company achieved profitability with non-GAAP EPS of $0.06, compared to $0.00 for the first quarter of 2013 and a loss of ($0.03) for the second quarter of 2012. |
DOT HILL SYSTEMS CORP. | |||||||||||||||||||
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||
(In thousands, except per share amounts) | |||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||
June 30, 2012 | March 31, 2013 | June 30, 2013 | June 30, 2012 | June 30, 2013 | |||||||||||||||
Net revenue | $ | 47,708 | $ | 44,480 | $ | 50,683 | $ | 102,306 | $ | 95,163 | |||||||||
Cost of goods sold | 35,047 | 30,040 | 33,676 | 74,080 | 63,716 | ||||||||||||||
Gross profit | 12,661 | 14,440 | 17,007 | 28,226 | 31,447 | ||||||||||||||
Operating expenses: | |||||||||||||||||||
Research and development | 9,660 | 8,713 | 8,908 | 18,857 | 17,621 | ||||||||||||||
Sales and marketing | 3,380 | 3,108 | 3,187 | 6,857 | 6,295 | ||||||||||||||
General and administrative | 2,166 | 3,137 | 2,767 | 5,000 | 5,904 | ||||||||||||||
Total operating expenses | 15,206 | 14,958 | 14,862 | 30,714 | 29,820 | ||||||||||||||
Operating income (loss) | (2,545 | ) | (518 | ) | 2,145 | (2,488 | ) | 1,627 | |||||||||||
Other income (expense): | |||||||||||||||||||
Interest income (expense), net | (7 | ) | (7 | ) | (8 | ) | — | (15 | ) | ||||||||||
Other income (expense), net | 7 | (1 | ) | 1 | 12 | — | |||||||||||||
Total other income (expense), net | — | (8 | ) | (7 | ) | 12 | (15 | ) | |||||||||||
Income (loss) before income taxes and discontinued operations | (2,545 | ) | (526 | ) | 2,138 | (2,476 | ) | 1,612 | |||||||||||
Income tax expense (benefit) | 400 | 34 | 49 | 309 | 83 | ||||||||||||||
Income (loss) from continuing operations | (2,945 | ) | (560 | ) | 2,089 | (2,785 | ) | 1,529 | |||||||||||
Loss from discontinued operations | (2,103 | ) | (421 | ) | (12 | ) | (4,131 | ) | (433 | ) | |||||||||
Net income (loss) | $ | (5,048 | ) | $ | (981 | ) | $ | 2,077 | $ | (6,916 | ) | $ | 1,096 | ||||||
Net earnings (loss) per share: | $ | (0.09 | ) | $ | (0.02 | ) | $ | 0.04 | $ | (0.12 | ) | $ | 0.02 | ||||||
Continuing operations: | |||||||||||||||||||
Basic and diluted earnings (loss) per share | $ | (0.05 | ) | $ | (0.01 | ) | $ | 0.04 | $ | (0.05 | ) | $ | 0.03 | ||||||
Discontinued operations: | |||||||||||||||||||
Basic and diluted loss per share | $ | (0.04 | ) | $ | (0.01 | ) | $ | — | $ | (0.07 | ) | $ | (0.01 | ) | |||||
Net income (loss): | |||||||||||||||||||
Basic and diluted income (loss) per share* | $ | (0.09 | ) | $ | (0.02 | ) | $ | 0.04 | $ | (0.12 | ) | $ | 0.02 | ||||||
Weighted average shares used to calculate net income (loss) per share: | |||||||||||||||||||
Basic | 56,934 | 58,001 | 58,384 | 56,484 | 58,194 | ||||||||||||||
Diluted | 56,934 | 58,001 | 58,797 | 56,484 | 58,616 |
DOT HILL SYSTEMS CORP. | ||||||||
UNAUDITED CONSOLIDATED BALANCE SHEETS | ||||||||
(In thousands, except par value data) | ||||||||
December 31, 2012 | June 30, 2013 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 40,315 | $ | 40,402 | ||||
Accounts receivable, net | 25,025 | 29,072 | ||||||
Inventories | 5,037 | 4,193 | ||||||
Prepaid expenses and other assets | 5,810 | 6,047 | ||||||
Total current assets | 76,187 | 79,714 | ||||||
Property and equipment, net | 7,147 | 7,842 | ||||||
Other assets | 603 | 559 | ||||||
Total assets | $ | 83,937 | $ | 88,115 | ||||
Liabilities and stockholders' equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 22,659 | $ | 24,528 | ||||
Accrued compensation | 4,863 | 5,163 | ||||||
Accrued expenses | 8,690 | 7,312 | ||||||
Deferred revenue | 2,889 | 3,970 | ||||||
Credit facility borrowings | 2,800 | 2,100 | ||||||
Total current liabilities | 41,901 | 43,073 | ||||||
Other long-term liabilities | 3,261 | 3,397 | ||||||
Total liabilities | 45,162 | 46,470 | ||||||
Stockholders' equity: | ||||||||
Preferred stock | — | — | ||||||
Common stock | 58 | 58 | ||||||
Additional paid-in capital | 326,575 | 328,145 | ||||||
Accumulated other comprehensive loss | (3,533 | ) | (3,329 | ) | ||||
Accumulated deficit | (284,325 | ) | (283,229 | ) | ||||
Total stockholders' equity | 38,775 | 41,645 | ||||||
Total liabilities and stockholders' equity | $ | 83,937 | $ | 88,115 |
DOT HILL SYSTEMS CORP. | ||||||||||||
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||
(INCLUDES RESULTS FROM BOTH DISCONTINUED AND CONTINUING OPERATIONS) | ||||||||||||
(In thousands) | ||||||||||||
Three Months Ended | ||||||||||||
June 30, 2012 | March 31, 2013 | June 30, 2013 | ||||||||||
Cash Flows From Operating Activities: | ||||||||||||
Net income (loss) | $ | (5,048 | ) | $ | (981 | ) | $ | 2,077 | ||||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||||||
Depreciation and amortization | 874 | 709 | 754 | |||||||||
Stock-based compensation expense | 934 | 668 | 689 | |||||||||
Provision for bad debt expense | 25 | — | (5 | ) | ||||||||
Write off of intangible assets | 1,647 | — | — | |||||||||
Write of property and equipment | 121 | — | — | |||||||||
Changes in operating assets and liabilities: | ||||||||||||
Accounts receivable | 8,051 | 2,521 | (6,574 | ) | ||||||||
Inventories | 99 | 91 | 748 | |||||||||
Prepaid expenses and other assets | 8,444 | (266 | ) | 26 | ||||||||
Accounts payable | (13,705 | ) | 456 | 1,667 | ||||||||
Accrued compensation and other expenses | (2,466 | ) | (3,074 | ) | 2,238 | |||||||
Deferred revenue | 698 | 682 | 416 | |||||||||
Other long-term liabilities | 530 | 142 | 18 | |||||||||
Net cash provided by operating activities | 204 | 948 | 2,054 | |||||||||
Cash Flows From Investing Activities: | ||||||||||||
Purchases of property and equipment | (1,098 | ) | (1,195 | ) | (1,132 | ) | ||||||
Net cash used in investing activities | (1,098 | ) | (1,195 | ) | (1,132 | ) | ||||||
Cash Flows From Financing Activities: | ||||||||||||
Payments on bank borrowings | — | (2,800 | ) | (2,800 | ) | |||||||
Proceeds from bank borrowings | — | 2,800 | 2,100 | |||||||||
Shares withheld for tax purposes | (132 | ) | (114 | ) | (101 | ) | ||||||
Proceeds from sale of stock to employees | — | 387 | 41 | |||||||||
Net cash provided by (used in) financing activities | (132 | ) | 273 | (760 | ) | |||||||
Effect of Exchange Rate Changes on Cash and Cash Equivalents | 78 | (44 | ) | (57 | ) | |||||||
Net Increase (Decrease) in Cash and Cash Equivalents | (948 | ) | (18 | ) | 105 | |||||||
Cash and Cash Equivalents, beginning of period | 41,447 | 40,315 | 40,297 | |||||||||
Cash and Cash Equivalents, end of period | $ | 40,499 | $ | 40,297 | $ | 40,402 | ||||||
Supplemental Disclosures of Non-Cash Investing and Financing Activities: | ||||||||||||
Capital assets acquired but not paid | $ | 811 | $ | 489 | $ | 308 |
Supplemental Cash Flow Data: | ||||||||||||
Cash paid for income taxes | $ | 5 | $ | 17 | $ | 67 |
DOT HILL SYSTEMS CORP. | |||||||||||||||||||
UNAUDITED RECONCILIATION OF CONSOLIDATED NON-GAAP MEASURES | |||||||||||||||||||
(In thousands, except per share amounts) | |||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||
June 30, 2012 | March 31, 2013 | June 30, 2013 | June 30, 2012 | June 30, 2013 | |||||||||||||||
GAAP net revenue from continuing operations | $ | 47,708 | $ | 44,480 | $ | 50,683 | $ | 102,306 | $ | 95,163 | |||||||||
Revenue from discontinued operations | 60 | 20 | 2 | 206 | 22 | ||||||||||||||
Net revenue, from continuing and discontinued operations | $ | 47,768 | $ | 44,500 | $ | 50,685 | $ | 102,512 | $ | 95,185 | |||||||||
AssuredUVS revenue | (60 | ) | (20 | ) | (2 | ) | (206 | ) | (22 | ) | |||||||||
Long-term software contract royalties | — | 401 | 550 | — | 951 | ||||||||||||||
Non-GAAP net revenue | $ | 47,708 | $ | 44,881 | $ | 51,233 | $ | 102,306 | $ | 96,114 | |||||||||
GAAP gross profit from continuing operations | $ | 12,661 | $ | 14,440 | $ | 17,007 | $ | 28,226 | $ | 31,447 | |||||||||
Gross margin % from continuing operations | 26.5 | % | 32.5 | % | 33.6 | % | 27.6 | % | 33.0 | % | |||||||||
Gross profit from discontinued operations | (1,706 | ) | (111 | ) | (9 | ) | (2,097 | ) | (120 | ) | |||||||||
Gross profit from continuing and discontinued operations | 10,955 | 14,329 | 16,998 | 26,129 | 31,327 | ||||||||||||||
Gross margin % from continuing and discontinued operations | 22.9 | % | 32.2 | % | 33.5 | % | 25.5 | % | 32.9 | % | |||||||||
Stock-based compensation | 167 | 96 | 83 | 339 | 179 | ||||||||||||||
Severance costs | — | 23 | — | 6 | 23 | ||||||||||||||
Power supply component failures | — | (808 | ) | 32 | — | (776 | ) | ||||||||||||
AssuredUVS revenue | (60 | ) | (20 | ) | (2 | ) | (206 | ) | (22 | ) | |||||||||
AssuredUVS expenses | 119 | 129 | 11 | 475 | 140 | ||||||||||||||
Long-term software contract royalties | — | 401 | 550 | — | 951 | ||||||||||||||
Long-term software contract cost | — | 256 | 89 | — | 345 | ||||||||||||||
Intangible asset impairment | 1,647 | — | — | 1,647 | — | ||||||||||||||
Intangible asset amortization | 266 | — | — | 707 | — | ||||||||||||||
Non-GAAP gross profit | $ | 13,094 | $ | 14,406 | $ | 17,761 | $ | 29,097 | $ | 32,167 | |||||||||
Non-GAAP gross margin % | 27.4 | % | 32.1 | % | 34.7 | % | 28.4 | % | 33.5 | % | |||||||||
GAAP operating expenses from continuing operations | $ | 15,206 | $ | 14,958 | $ | 14,862 | $ | 30,714 | $ | 29,820 | |||||||||
Operating expenses from discontinued operations | 397 | 310 | 3 | 2,033 | 313 | ||||||||||||||
Operating expenses from continuing and discontinued operations | 15,603 | 15,268 | 14,865 | 32,747 | 30,133 | ||||||||||||||
Currency loss | 29 | (343 | ) | (18 | ) | (347 | ) | (361 | ) | ||||||||||
Stock-based compensation | (767 | ) | (572 | ) | (606 | ) | (1,737 | ) | (1,178 | ) | |||||||||
Contingent consideration adjustment | 5 | — | — | 5 | — | ||||||||||||||
AssuredUVS expenses | (182 | ) | (353 | ) | (5 | ) | (1,139 | ) | (358 | ) | |||||||||
Long-term software contract deferred cost | — | 400 | 6 | — | 406 |
Restructuring (charge) recoveries | (73 | ) | 10 | — | (674 | ) | 10 | ||||||||||||
Legal fees related to power supply component failure | $ | — | $ | (1 | ) | $ | (1 | ) | $ | — | $ | (2 | ) | ||||||
Severance costs | — | (82 | ) | — | (9 | ) | (82 | ) | |||||||||||
Non-GAAP operating expenses | $ | 14,615 | $ | 14,327 | $ | 14,241 | $ | 28,846 | $ | 28,568 | |||||||||
GAAP net income (loss) from continuing operations | $ | (2,945 | ) | $ | (560 | ) | $ | 2,089 | $ | (2,785 | ) | $ | 1,529 | ||||||
Net loss from discontinued operations | (2,103 | ) | (421 | ) | (12 | ) | (4,131 | ) | (433 | ) | |||||||||
Net loss from continuing and discontinued operations | (5,048 | ) | (981 | ) | 2,077 | (6,916 | ) | 1,096 | |||||||||||
Currency loss | (29 | ) | 343 | 18 | 347 | 361 | |||||||||||||
Stock-based compensation | 935 | 668 | 689 | 2,077 | 1,357 | ||||||||||||||
Contingent consideration adjustment | (5 | ) | — | — | (5 | ) | — | ||||||||||||
Restructuring charge (recoveries) | 73 | (10 | ) | — | 674 | (10 | ) | ||||||||||||
Intangible asset amortization | 266 | — | — | 707 | — | ||||||||||||||
Power supply component failures | — | (807 | ) | 33 | — | (774 | ) | ||||||||||||
AssuredUVS expenses | 301 | 482 | 16 | 1,613 | 498 | ||||||||||||||
AssuredUVS revenue | (60 | ) | (20 | ) | (2 | ) | (206 | ) | (22 | ) | |||||||||
Long-term software contract royalties | — | 401 | 550 | — | 951 | ||||||||||||||
Long-term software contract cost | — | 256 | 89 | — | 345 | ||||||||||||||
Long-term software contract deferred cost | — | (400 | ) | (6 | ) | — | (406 | ) | |||||||||||
Intangible asset impairment | 1,647 | — | — | 1,647 | — | ||||||||||||||
Severance costs | — | 105 | — | 15 | 105 | ||||||||||||||
Non-GAAP net income (loss) | $ | (1,920 | ) | $ | 37 | $ | 3,464 | $ | (47 | ) | $ | 3,501 | |||||||
Non-GAAP net income (loss) per share | |||||||||||||||||||
Basic and diluted | $ | (0.03 | ) | $ | — | $ | 0.06 | $ | — | $ | 0.06 | ||||||||
Weighted average shares used to calculate net income (loss) per share: | |||||||||||||||||||
Basic | 56,934 | 58,001 | 58,384 | 56,484 | 58,194 | ||||||||||||||
Diluted | 56,934 | 58,473 | 58,797 | 56,484 | 58,616 | ||||||||||||||
Non-GAAP net income (loss) | $ | (1,920 | ) | $ | 37 | $ | 3,464 | $ | (47 | ) | $ | 3,501 | |||||||
Interest expense less AssuredUVS | 7 | 7 | 8 | 14 | 15 | ||||||||||||||
Income tax expense (benefit) | 400 | 34 | 49 | 309 | 83 | ||||||||||||||
Depreciation less AssuredUVS | 632 | 706 | 757 | 1,177 | 1,463 | ||||||||||||||
Non-GAAP EBITDA | $ | (881 | ) | $ | 784 | $ | 4,278 | $ | 1,453 | $ | 5,062 |
DOT HILL SYSTEMS CORP. | ||||||||||||||||||||
NON-GAAP REVENUE DETAIL BY MARKET | ||||||||||||||||||||
(In thousands) | ||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||
June 30, 2012 | March 31, 2013 | June 30, 2013 | June 30, 2012 | June 30, 2013 | ||||||||||||||||
HP | $ | 34,299 | $ | 27,329 | $ | 25,480 | $ | 67,524 | $ | 52,809 | ||||||||||
Other Server OEMs | 1,911 | 2,718 | 3,577 | 3,696 | 6,295 | |||||||||||||||
Total Server OEMs | 36,210 | $ | 30,047 | $ | 29,057 | $ | 71,220 | $ | 59,104 | |||||||||||
Vertical Markets | 9,986 | 13,299 | 20,564 | 27,035 | 33,863 | |||||||||||||||
Service | 1,512 | 1,535 | 1,612 | 4,051 | 3,147 | |||||||||||||||
Total Non-GAAP Revenue | $ | 47,708 | $ | 44,881 | $ | 51,233 | $ | 102,306 | $ | 96,114 |
DOT HILL SYSTEMS CORP. | |||||||||||||||||||
UNAUDITED RECONCILIATION OF CONSOLIDATED NON-GAAP MEASURES | |||||||||||||||||||
(In thousands, except per share amounts) | |||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||
June 30, 2012 | March 31, 2013 | June 30, 2013 | June 30, 2012 | June 30, 2013 | |||||||||||||||
GAAP earnings (loss) per share from continuing operations | $ | (0.05 | ) | $ | (0.01 | ) | $ | 0.04 | $ | (0.05 | ) | $ | 0.03 | ||||||
Loss per share from discontinued operations | (0.04 | ) | (0.01 | ) | — | (0.07 | ) | (0.01 | ) | ||||||||||
Loss per share from continuing and discontinued operations* | (0.09 | ) | (0.02 | ) | 0.04 | (0.12 | ) | 0.02 | |||||||||||
Currency loss | — | 0.01 | — | 0.01 | 0.01 | ||||||||||||||
Stock-based compensation | 0.02 | 0.01 | 0.01 | 0.04 | 0.02 | ||||||||||||||
Intangible asset amortization | — | — | — | 0.01 | — | ||||||||||||||
AssuredUVS expenses | 0.01 | 0.01 | — | 0.03 | 0.01 | ||||||||||||||
Intangible asset impairment | 0.03 | — | — | 0.03 | — | ||||||||||||||
Long-term software contract royalties | — | 0.01 | 0.01 | — | — | ||||||||||||||
Long-term software contract deferred cost | — | (0.01 | ) | — | — | — | |||||||||||||
Other adjustments | — | (0.01 | ) | — | 0.01 | ||||||||||||||
Non-GAAP earnings (loss) per share* | $ | (0.03 | ) | $ | — | $ | 0.06 | $ | — | $ | 0.06 | ||||||||
Weighted average shares used to calculate earnings (loss) per share: | |||||||||||||||||||
Basic | 56,934 | 58,001 | 58,384 | 56,484 | 58,194 | ||||||||||||||
Diluted | 56,934 | 58,473 | 58,797 | 56,484 | 58,616 | ||||||||||||||
* Per share data may not always add to the total for the period because each figure is independently calculated. |