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 March 6, 2014. |
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 March 6, 2014. |
• | Grew fourth quarter 2013 non-GAAP revenue to $59.7 million, up 29% year-over-year |
• | Delivered Vertical Markets non-GAAP revenue growth of 64% in Q413 versus Q412 and 42% in 2013 versus 2012 |
• | Achieved full year GAAP profitability for the first time since 2005 |
• | Entered into several new OEM customer agreements including Acer Europe SA, CGG, Quantum Corporation, Supermicro® and Teradata Corporation. |
• | Received five new patents bringing the total to 92 awarded. |
• | Provided the Company’s largest customer with a first to market advantage in 16Gb Fibre Channel, 12 Gb SAS and 16 Gb Fibre Channel / 10Gb iSCSI converged interface entry level storage solutions. |
• | Expanded the breadth and depth of the Company’s product line, introducing new reference platforms for OEM telecommunication customers. |
• | Net revenue was $58.8 million for the fourth quarter of 2013, compared to $44.1 million for the fourth quarter of 2012 and $52.6 million for the third quarter of 2013. |
• | Gross margin for the fourth quarter of 2013 was 30.2%, compared to 17.8% for the fourth quarter of 2012 and 32.1% for the third quarter of 2013. |
• | Operating expenses for the fourth quarter of 2013 were $15.7 million, compared to $12.6 million for the fourth quarter of 2012 and $15.0 million in the third quarter of 2013. |
• | Net income for the fourth quarter of 2013 was $2.2 million, or $0.04 per fully diluted share, compared to a net loss of $5.0 million, or ($0.09) per share, for the fourth quarter of 2012, and net income of $1.8 million, or $0.03 per fully diluted share, for the third quarter of 2013. |
• | Non-GAAP net revenue increased to $59.7 million for the fourth quarter of 2013, compared to $46.2 million for the fourth quarter of 2012 and $52.9 million for the third quarter of 2013. |
• | Non-GAAP gross margin for the fourth quarter of 2013 was 31.7%, compared to 28.3% for the fourth quarter of 2012 and 32.8% for the third quarter of 2013. |
• | Non-GAAP operating expenses for the fourth quarter of 2013 were $14.8 million, as compared to $14.7 million for the fourth quarter of 2012 and $14.5 million in the third quarter of 2013. |
• | Non-GAAP net income for the fourth quarter of 2013 was $4.2 million, or $0.07 per fully diluted share, as compared to a net loss of $2.0 million, or ($0.03) per share, for the fourth quarter of 2012, and net income of $2.8 million, or $0.05 per fully diluted share, for the third quarter of 2013. |
• | Net revenue was $206.6 million for 2013, compared to $194.9 million in 2012. |
• | Gross margin for 2013 was 31.9%, compared to 23.7% in 2012. |
• | Operating expenses for 2013 were $60.8 million, compared to $60.4 million in 2012. |
• | Net income for the full year of 2013 was $5.1 million, or $0.09 per fully diluted share, compared to a net loss of $15.0 million, or ($0.26) per share for the full year of 2012. |
• | Non-GAAP net revenue grew to $208.7 million for 2013, compared to $196.7 million in 2012. |
• | Non-GAAP gross margin for 2013 was 32.8%, compared to 27.9% in 2012. |
• | Non-GAAP operating expenses for 2013 were $57.8 million, compared to $57.8 million in 2012. |
• | Non-GAAP net income for the full year of 2013 was $10.5 million, or $0.18 per fully diluted share, compared to a net loss of $3.7 million, or ($0.06) per share for the full year of 2012. |
DOT HILL SYSTEMS CORP. | |||||||||||||||||||
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||
(In thousands, except per share amounts) | |||||||||||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||||||||
December 31, 2012 | September 30, 2013 | December 31, 2013 | December 31, 2012 | December 31, 2013 | |||||||||||||||
Net revenue | $ | 44,019 | $ | 52,603 | $ | 58,799 | $ | 194,548 | $ | 206,565 | |||||||||
Cost of goods sold | 36,142 | 35,730 | 41,049 | 146,177 | 140,495 | ||||||||||||||
Gross profit | 7,877 | 16,873 | 17,750 | 48,371 | 66,070 | ||||||||||||||
Operating expenses: | |||||||||||||||||||
Research and development | 5,973 | 8,972 | 8,739 | 34,199 | 35,332 | ||||||||||||||
Sales and marketing | 3,718 | 3,512 | 3,643 | 14,133 | 13,450 | ||||||||||||||
General and administrative | 2,777 | 2,512 | 3,242 | 9,695 | 11,658 | ||||||||||||||
Total operating expenses | 12,468 | 14,996 | 15,624 | 58,027 | 60,440 | ||||||||||||||
Operating income (loss) | (4,591 | ) | 1,877 | 2,126 | (9,656 | ) | 5,630 | ||||||||||||
Other income (expense): | |||||||||||||||||||
Interest expense, net | (4 | ) | (1 | ) | — | (8 | ) | (16 | ) | ||||||||||
Other income (expense), net | (1 | ) | (1 | ) | (22 | ) | 11 | (23 | ) | ||||||||||
Total other income (expense), net | (5 | ) | (2 | ) | (22 | ) | 3 | (39 | ) | ||||||||||
Income (loss) before income taxes and discontinued operations | (4,596 | ) | 1,875 | 2,104 | (9,653 | ) | 5,591 | ||||||||||||
Income tax expense (benefit) | 287 | 100 | (132 | ) | 749 | 51 | |||||||||||||
Income (loss) from continuing operations | (4,883 | ) | 1,775 | 2,236 | (10,402 | ) | 5,540 | ||||||||||||
Loss from discontinued operations | (137 | ) | (18 | ) | (24 | ) | (4,548 | ) | (476 | ) | |||||||||
Net income (loss) | $ | (5,020 | ) | $ | 1,757 | $ | 2,212 | $ | (14,950 | ) | $ | 5,064 | |||||||
Continuing operations: | |||||||||||||||||||
Basic and diluted earnings (loss) per share | $ | (0.08 | ) | $ | 0.03 | $ | 0.04 | $ | (0.18 | ) | $ | 0.09 | |||||||
Discontinued operations: | |||||||||||||||||||
Basic and diluted loss per share | $ | — | $ | — | $ | — | $ | (0.08 | ) | $ | (0.01 | ) | |||||||
Net income (loss): | |||||||||||||||||||
Basic and diluted income (loss) per share* | $ | (0.09 | ) | $ | 0.03 | $ | 0.04 | $ | (0.26 | ) | $ | 0.09 | |||||||
Weighted average shares used to calculate net income (loss) per share: | |||||||||||||||||||
Basic | 57,501 | 58,736 | 58,948 | 56,954 | 58,521 | ||||||||||||||
Diluted | 57,501 | 60,062 | 60,867 | 56,954 | 59,247 |
DOT HILL SYSTEMS CORP. | ||||||||
UNAUDITED CONSOLIDATED BALANCE SHEETS | ||||||||
(In thousands, except par value data) | ||||||||
December 31, 2012 | December 31, 2013 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 40,315 | $ | 40,406 | ||||
Accounts receivable, net | 25,025 | 42,907 | ||||||
Inventories | 5,037 | 6,539 | ||||||
Prepaid expenses and other assets | 5,810 | 7,265 | ||||||
Total current assets | 76,187 | 97,117 | ||||||
Property and equipment, net | 7,147 | 7,565 | ||||||
Other assets | 603 | 702 | ||||||
Total assets | $ | 83,937 | $ | 105,384 | ||||
Liabilities and stockholders' equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 22,659 | $ | 33,255 | ||||
Accrued compensation | 4,863 | 4,922 | ||||||
Accrued expenses | 8,690 | 8,935 | ||||||
Deferred revenue | 2,889 | 4,211 | ||||||
Credit facility borrowings | 2,800 | 2,000 | ||||||
Total current liabilities | 41,901 | 53,323 | ||||||
Other long-term liabilities | 3,261 | 4,414 | ||||||
Total liabilities | 45,162 | 57,737 | ||||||
Stockholders' equity: | ||||||||
Preferred stock | — | — | ||||||
Common stock | 58 | 59 | ||||||
Additional paid-in capital | 326,575 | 330,103 | ||||||
Accumulated other comprehensive loss | (3,533 | ) | (3,254 | ) | ||||
Accumulated deficit | (284,325 | ) | (279,261 | ) | ||||
Total stockholders' equity | 38,775 | 47,647 | ||||||
Total liabilities and stockholders' equity | $ | 83,937 | $ | 105,384 |
DOT HILL SYSTEMS CORP. | ||||||||||||
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||
(INCLUDES RESULTS FROM BOTH DISCONTINUED AND CONTINUING OPERATIONS) | ||||||||||||
(In thousands) | ||||||||||||
Three Months Ended | ||||||||||||
December 31, 2012 | September 30, 2013 | December 31, 2013 | ||||||||||
Cash Flows From Operating Activities: | ||||||||||||
Net income (loss) | $ | (5,020 | ) | $ | 1,757 | $ | 2,212 | |||||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||||||
Depreciation and amortization | 699 | 852 | 810 | |||||||||
Stock-based compensation expense | 750 | 560 | 773 | |||||||||
Provision for bad debt expense | 13 | 7 | — | |||||||||
Write off (recovery) of fixed assets | (68 | ) | — | 23 | ||||||||
Changes in operating assets and liabilities: | ||||||||||||
Accounts receivable | 3,269 | (1,108 | ) | (12,770 | ) | |||||||
Inventories | 369 | (2,236 | ) | (106 | ) | |||||||
Prepaid expenses and other assets | 673 | (751 | ) | (627 | ) | |||||||
Accounts payable | (4,266 | ) | 2,413 | 6,564 | ||||||||
Accrued compensation and other expenses | 923 | 478 | 972 | |||||||||
Deferred revenue | 1,637 | 244 | (2 | ) | ||||||||
Other long-term liabilities | 1,707 | (9 | ) | 1,030 | ||||||||
Net cash provided by (used in) operating activities | 686 | 2,207 | (1,121 | ) | ||||||||
Cash Flows From Investing Activities: | ||||||||||||
Purchases of property and equipment | (1,698 | ) | (600 | ) | (717 | ) | ||||||
Proceeds from Sale of property and equipment | 74 | — | — | |||||||||
Net cash used in investing activities | (1,624 | ) | (600 | ) | (717 | ) | ||||||
Cash Flows From Financing Activities: | ||||||||||||
Payments on bank borrowings | (1,800 | ) | (2,100 | ) | — | |||||||
Proceeds from bank borrowings | 2,800 | — | 2,000 | |||||||||
Shares withheld for tax purposes | (45 | ) | (7 | ) | (1 | ) | ||||||
Proceeds from sale of stock to employees | — | 380 | 254 | |||||||||
Net cash provided by (used in) financing activities | 955 | (1,727 | ) | 2,253 | ||||||||
Effect of Exchange Rate Changes on Cash and Cash Equivalents | (244 | ) | 75 | (366 | ) | |||||||
Net Increase (Decrease) in Cash and Cash Equivalents | (227 | ) | (45 | ) | 49 | |||||||
Cash and Cash Equivalents, beginning of period | 40,452 | 40,402 | 40,357 | |||||||||
Cash and Cash Equivalents, end of period | $ | 40,315 | $ | 40,357 | $ | 40,406 | ||||||
Supplemental Disclosures of Non-Cash Investing and Financing Activities: | ||||||||||||
Capital assets acquired but not paid | $ | 477 | $ | 340 | $ | 369 | ||||||
Supplemental Cash Flow Data: | ||||||||||||
Cash paid (refund) for income taxes | $ | 32 | $ | (9 | ) | $ | (3 | ) |
DOT HILL SYSTEMS CORP. | |||||||||||||||||||
UNAUDITED RECONCILIATION OF CONSOLIDATED NON-GAAP MEASURES | |||||||||||||||||||
(In thousands, except per share amounts) | |||||||||||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||||||||
December 31, 2012 | September 30, 2013 | December 31, 2013 | December 31, 2012 | December 31, 2013 | |||||||||||||||
GAAP net revenue from continuing operations | $ | 44,019 | $ | 52,603 | $ | 58,799 | $ | 194,548 | $ | 206,565 | |||||||||
Revenue from discontinued operations | 128 | 18 | 10 | 360 | 50 | ||||||||||||||
Net revenue, from continuing and discontinued operations | $ | 44,147 | $ | 52,621 | $ | 58,809 | $ | 194,908 | $ | 206,615 | |||||||||
AssuredUVS revenue | (128 | ) | (18 | ) | (10 | ) | (360 | ) | (50 | ) | |||||||||
Long-term software contract royalties | 2,141 | 286 | 942 | 2,141 | 2,179 | ||||||||||||||
Non-GAAP net revenue | $ | 46,160 | $ | 52,889 | $ | 59,741 | $ | 196,689 | $ | 208,744 | |||||||||
GAAP gross profit from continuing operations | $ | 7,877 | $ | 16,873 | $ | 17,750 | $ | 48,371 | $ | 66,070 | |||||||||
Gross margin % from continuing operations | 17.9 | % | 32.1 | % | 30.2 | % | 24.9 | % | 32.0 | % | |||||||||
Gross profit from discontinued operations | — | 18 | 10 | (2,141 | ) | (92 | ) | ||||||||||||
Gross profit from continuing and discontinued operations | 7,877 | 16,891 | 17,760 | 46,230 | 65,978 | ||||||||||||||
Gross margin % from continuing and discontinued operations | 17.8 | % | 32.1 | % | 30.2 | % | 23.7 | % | 31.9 | % | |||||||||
Stock-based compensation | 135 | 75 | 80 | 618 | 334 | ||||||||||||||
Severance costs | 4 | 17 | — | 71 | 40 | ||||||||||||||
Power supply component failures | — | (6 | ) | 75 | — | (707 | ) | ||||||||||||
AssuredUVS revenue | (128 | ) | (18 | ) | (10 | ) | (360 | ) | (50 | ) | |||||||||
AssuredUVS expenses | 128 | — | — | 673 | 140 | ||||||||||||||
Long-term software contract royalties | 2,141 | 286 | 942 | 2,141 | 2,179 | ||||||||||||||
Long-term software contract costs | 2,885 | 88 | 90 | 2,885 | 523 | ||||||||||||||
Intangible asset impairment | — | — | — | 1,647 | — | ||||||||||||||
Intangible asset amortization | — | — | — | 952 | — | ||||||||||||||
Non-GAAP gross profit | $ | 13,042 | $ | 17,333 | $ | 18,937 | $ | 54,857 | $ | 68,437 | |||||||||
Non-GAAP gross margin % | 28.3 | % | 32.8 | % | 31.7 | % | 27.9 | % | 32.8 | % | |||||||||
GAAP operating expenses from continuing operations | $ | 12,468 | $ | 14,996 | $ | 15,624 | $ | 58,027 | $ | 60,440 | |||||||||
Operating expenses from discontinued operations | 137 | 36 | 33 | 2,406 | 383 | ||||||||||||||
Operating expenses from continuing and discontinued operations | $ | 12,605 | $ | 15,032 | $ | 15,657 | $ | 60,433 | $ | 60,823 | |||||||||
Currency loss | (341 | ) | (4 | ) | (152 | ) | (555 | ) | (517 | ) | |||||||||
Stock-based compensation | (615 | ) | (485 | ) | (693 | ) | (3,105 | ) | (2,356 | ) | |||||||||
Contingent consideration adjustment | — | — | — | 5 | — | ||||||||||||||
AssuredUVS expenses | (147 | ) | — | (8 | ) | (1,585 | ) | (366 | ) | ||||||||||
Long-term software contract deferred costs | 3,562 | (41 | ) | 29 | 3,562 | 394 |
Restructuring (charge) recoveries | (95 | ) | (35 | ) | (11 | ) | (639 | ) | (36 | ) | |||||||||
Legal fees related to power supply component failure | (9 | ) | — | — | (49 | ) | (2 | ) | |||||||||||
Severance costs | (237 | ) | (8 | ) | (7 | ) | (257 | ) | (97 | ) | |||||||||
Non-GAAP operating expenses | $ | 14,723 | $ | 14,459 | $ | 14,815 | $ | 57,810 | $ | 57,843 | |||||||||
GAAP net income (loss) from continuing operations | $ | (4,883 | ) | $ | 1,775 | $ | 2,236 | $ | (10,402 | ) | $ | 5,540 | |||||||
Net loss from discontinued operations | (137 | ) | (18 | ) | (24 | ) | (4,548 | ) | (476 | ) | |||||||||
Net income (loss) from continuing and discontinued operations | $ | (5,020 | ) | $ | 1,757 | $ | 2,212 | $ | (14,950 | ) | $ | 5,064 | |||||||
Currency loss | 341 | 4 | 152 | 555 | 517 | ||||||||||||||
Stock-based compensation | 750 | 560 | 773 | 3,724 | 2,690 | ||||||||||||||
Contingent consideration adjustment | — | — | — | (5 | ) | — | |||||||||||||
Restructuring charge (recoveries) | 95 | 35 | 11 | 639 | 36 | ||||||||||||||
Intangible asset amortization | — | — | — | 952 | — | ||||||||||||||
Power supply component failures | 9 | (6 | ) | 75 | 49 | (705 | ) | ||||||||||||
AssuredUVS expenses | 275 | — | 8 | 2,258 | 506 | ||||||||||||||
AssuredUVS revenue | (128 | ) | (18 | ) | (10 | ) | (360 | ) | (50 | ) | |||||||||
Long-term software contract royalties | 2,141 | 286 | 942 | 2,141 | 2,179 | ||||||||||||||
Long-term software contract costs | 2,885 | 88 | 90 | 2,885 | 523 | ||||||||||||||
Long-term software contract deferred costs | (3,562 | ) | 41 | (29 | ) | (3,562 | ) | (394 | ) | ||||||||||
Intangible asset impairment | — | — | — | 1,647 | — | ||||||||||||||
Severance costs | 241 | 25 | 7 | 327 | 137 | ||||||||||||||
Non-GAAP net income (loss) | $ | (1,973 | ) | $ | 2,772 | $ | 4,231 | $ | (3,700 | ) | $ | 10,503 | |||||||
Non-GAAP net income (loss) per share | |||||||||||||||||||
Basic and diluted | $ | (0.03 | ) | $ | 0.05 | $ | 0.07 | $ | (0.06 | ) | $ | 0.18 | |||||||
Weighted average shares used to calculate net income (loss) per share: | |||||||||||||||||||
Basic | 57,501 | 58,736 | 58,948 | 56,954 | 58,521 | ||||||||||||||
Diluted | 57,501 | 60,062 | 60,867 | 56,954 | 59,247 | ||||||||||||||
Non-GAAP net income (loss) | $ | (1,973 | ) | $ | 2,772 | $ | 4,231 | $ | (3,700 | ) | $ | 10,503 | |||||||
Interest expense (income) less AssuredUVS | 12 | 1 | (2 | ) | 38 | 14 | |||||||||||||
Income tax expense (benefit) | 287 | 100 | (132 | ) | 749 | 51 | |||||||||||||
Depreciation less AssuredUVS | 697 | 852 | 810 | 2,500 | 3,125 | ||||||||||||||
Non-GAAP EBITDA | $ | (977 | ) | $ | 3,725 | $ | 4,907 | $ | (413 | ) | $ | 13,693 |
DOT HILL SYSTEMS CORP. | ||||||||||||||||||||
UNAUDITED NON-GAAP REVENUE DETAIL BY MARKET | ||||||||||||||||||||
(In thousands) | ||||||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||||||
December 31, 2012 | September 30, 2013 | December 31, 2013 | December 31, 2012 | December 31, 2013 | ||||||||||||||||
HP | $ | 29,869 | $ | 30,618 | $ | 35,608 | $ | 130,253 | $ | 119,036 | ||||||||||
Other Server OEMs | 3,831 | 3,995 | 4,208 | 11,193 | 14,496 | |||||||||||||||
Total Server OEMs | $ | 33,700 | $ | 34,613 | $ | 39,816 | $ | 141,446 | $ | 133,532 | ||||||||||
Vertical Markets | 11,056 | 16,748 | 18,174 | 48,352 | 68,785 | |||||||||||||||
Service | 1,404 | 1,528 | 1,751 | 6,891 | 6,427 | |||||||||||||||
Total Non-GAAP Revenue | $ | 46,160 | $ | 52,889 | $ | 59,741 | $ | 196,689 | $ | 208,744 |
DOT HILL SYSTEMS CORP. | |||||||||||||||||||
UNAUDITED RECONCILIATION OF CONSOLIDATED NON-GAAP MEASURES | |||||||||||||||||||
(In thousands, except per share amounts) | |||||||||||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||||||||
December 31, 2012 | September 30, 2013 | December 31, 2013 | December 31, 2012 | December 31, 2013 | |||||||||||||||
GAAP earnings (loss) per share from continuing operations | $ | (0.08 | ) | $ | 0.03 | $ | 0.04 | $ | (0.18 | ) | $ | 0.09 | |||||||
Loss per share from discontinued operations | — | — | — | (0.08 | ) | (0.01 | ) | ||||||||||||
Earnings (loss) per share from continuing and discontinued operations* | $ | (0.09 | ) | $ | 0.03 | $ | 0.04 | $ | (0.26 | ) | $ | 0.09 | |||||||
Currency loss | 0.01 | — | — | 0.01 | 0.01 | ||||||||||||||
Stock-based compensation | 0.01 | 0.01 | 0.01 | 0.07 | 0.05 | ||||||||||||||
Intangible asset amortization | — | — | — | 0.02 | — | ||||||||||||||
Power supply component failures | — | — | — | — | (0.01 | ) | |||||||||||||
AssuredUVS expenses | — | — | — | 0.04 | 0.01 | ||||||||||||||
Intangible asset impairment | — | — | — | 0.03 | — | ||||||||||||||
Restructuring expense | — | — | — | 0.01 | — | ||||||||||||||
Long-term software contract royalties | 0.04 | — | 0.02 | 0.04 | 0.04 | ||||||||||||||
Long-term software contract costs | 0.05 | — | — | 0.05 | 0.01 | ||||||||||||||
Long-term software contract deferred costs | (0.06 | ) | — | — | (0.06 | ) | (0.01 | ) | |||||||||||
Other adjustments | 0.01 | 0.01 | — | (0.01 | ) | (0.01 | ) | ||||||||||||
Non-GAAP earnings (loss) per share* | $ | (0.03 | ) | $ | 0.05 | $ | 0.07 | $ | (0.06 | ) | $ | 0.18 | |||||||
Weighted average shares used to calculate earnings (loss) per share: | |||||||||||||||||||
Basic | 57,501 | 58,736 | 58,948 | 56,954 | 58,521 | ||||||||||||||
Diluted | 57,501 | 60,062 | 60,867 | 56,954 | 59,247 | ||||||||||||||
* Per share data may not always add to the total for the period because each figure is independently calculated. |