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 7, 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 August 7, 2014. |
• | Grew trailing 12 month as of June 30, 2014 relative to trailing 12 month as of June 30, 2013 non-GAAP revenue by 10%, with Vertical Markets growing 37% over the same period |
• | Achieved non-GAAP gross margin of 33.9%, compared to 33.1% in the first quarter of 2014 and 34.7% in the second quarter of 2013 |
• | Delivered non-GAAP earnings per fully diluted share of $0.02, compared to $0.02 in the first quarter 2014 and $0.06 in the second quarter of 2013 |
• | Net revenue was $48.2 million for the second quarter of 2014, compared to $50.7 million for the second quarter of 2013 and $48.2 million for the first quarter of 2014. |
• | Gross margin for the second quarter of 2014 was 33.2%, compared to 33.5% for the second quarter of 2013 and 31.7% for the first quarter of 2014. |
• | Operating expenses for the second quarter of 2014 were $16.0 million, compared to $14.9 million for the second quarter of 2013 and $15.7 million in the first quarter of 2014. |
• | Net loss for the second quarter of 2014 was $0.08 million, or ($0.00) per fully diluted share, compared to net income of $2.1 million, or $0.04 per fully diluted share, for the second quarter of 2013, and a net loss of $0.4 million, or ($0.01) per fully diluted share, for the first quarter of 2014. |
• | Non-GAAP net revenue was $48.4 million for the second quarter of 2014, compared to $51.2 million for the second quarter of 2013 and $48.9 million for the first quarter of 2014. |
◦ | Vertical Markets non-GAAP net revenue was $20.8 million, compared to $21.3 million in the second quarter of 2013 and $22.4 million in the first quarter of 2014. |
◦ | Server OEM non-GAAP net revenue was $27.7 million, compared to $30.0 million in the second quarter of 2013 and $26.5 million in the first quarter of 2014. |
• | Non-GAAP gross margin for the second quarter of 2014 was 33.9%, compared to 34.7% in the second quarter of 2013 and 33.1% in the first quarter of 2014. |
◦ | Vertical Markets non-GAAP gross margin was 44.7%, up from 43.2% in the second quarter of 2013 and 43.4% in the first quarter of 2014. |
◦ | Server OEM non-GAAP gross margin was 25.9%, compared to 28.6% in the second quarter of 2013 and 24.4% in the first quarter of 2014. |
• | Non-GAAP operating expenses for the second quarter of 2014 were $15.1 million, compared to $14.2 million for the second quarter of 2013 and $15.1 million in the first quarter of 2014. |
• | Vertical Markets non-GAAP contribution margin was 33.0% for the second quarter of 2014, compared to 34.0% in the second quarter of 2013 and 33.6% in the first quarter of 2014. |
• | Server OEM non-GAAP contribution margin was 24.0% for the second quarter of 2014, compared to 26.7% in the second quarter of 2013 and 22.7% in the first quarter of 2014. |
• | Non-GAAP net income for the second quarter of 2014 was $1.3 million, or $0.02 per fully diluted share, compared to $3.5 million or $0.06 per share, for the second quarter of 2013, and $1.0 million, or $0.02 per fully diluted share, for the first quarter of 2014. |
DOT HILL SYSTEMS CORP. | |||||||||||||||||||
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||
(In thousands, except per share amounts) | |||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||
June 30, 2013 | March 31, 2014 | June 30, 2014 | June 30, 2013 | June 30, 2014 | |||||||||||||||
Net revenue | $ | 50,683 | $ | 48,207 | $ | 48,222 | $ | 95,163 | $ | 96,429 | |||||||||
Cost of goods sold | 33,676 | 32,942 | 32,199 | 63,716 | 65,141 | ||||||||||||||
Gross profit | 17,007 | 15,265 | 16,023 | 31,447 | 31,288 | ||||||||||||||
Operating expenses: | |||||||||||||||||||
Research and development | 8,908 | 9,476 | 9,340 | 17,621 | 18,816 | ||||||||||||||
Sales and marketing | 3,187 | 3,294 | 3,843 | 6,295 | 7,137 | ||||||||||||||
General and administrative | 2,767 | 2,898 | 2,851 | 5,904 | 5,749 | ||||||||||||||
Total operating expenses | 14,862 | 15,668 | 16,034 | 29,820 | 31,702 | ||||||||||||||
Operating income (loss) | 2,145 | (403 | ) | (11 | ) | 1,627 | (414 | ) | |||||||||||
Other income (expense): | |||||||||||||||||||
Interest income (expense), net | (8 | ) | (18 | ) | (4 | ) | (15 | ) | (22 | ) | |||||||||
Other income (expense), net | 1 | 10 | 11 | — | 21 | ||||||||||||||
Total other income (expense), net | (7 | ) | (8 | ) | 7 | (15 | ) | (1 | ) | ||||||||||
Income (loss) before income taxes and discontinued operations | 2,138 | (411 | ) | (4 | ) | 1,612 | (415 | ) | |||||||||||
Income tax expense | 49 | 1 | 74 | 83 | 75 | ||||||||||||||
Income (loss) from continuing operations | 2,089 | (412 | ) | (78 | ) | 1,529 | (490 | ) | |||||||||||
Loss from discontinued operations | (12 | ) | — | — | (433 | ) | — | ||||||||||||
Net income (loss) | $ | 2,077 | $ | (412 | ) | $ | (78 | ) | $ | 1,096 | $ | (490 | ) | ||||||
Continuing operations: | |||||||||||||||||||
Basic and diluted income (loss) per share | $ | 0.04 | $ | (0.01 | ) | $ | (0.00 | ) | $ | 0.03 | $ | (0.01 | ) | ||||||
Discontinued operations: | |||||||||||||||||||
Basic and diluted loss per share | $ | (0.00 | ) | $ | — | $ | — | $ | (0.01 | ) | $ | — | |||||||
Net income (loss): | |||||||||||||||||||
Basic and diluted income (loss) per share* | $ | 0.04 | $ | (0.01 | ) | $ | (0.00 | ) | $ | 0.02 | $ | (0.01 | ) | ||||||
Weighted average shares used to calculate net income (loss) per share: | |||||||||||||||||||
Basic | 58,384 | 59,678 | 60,159 | 58,194 | 59,920 | ||||||||||||||
Diluted | 58,797 | 59,678 | 60,159 | 58,616 | 59,920 | ||||||||||||||
* Per share data may not always add to the total for the period because each figure is independently calculated. |
DOT HILL SYSTEMS CORP. | |||||||
UNAUDITED CONSOLIDATED BALANCE SHEETS | |||||||
(In thousands, except par value data) | |||||||
December 31, 2013 | June 30, 2014 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 40,406 | $ | 42,196 | |||
Accounts receivable, net | 42,907 | 32,814 | |||||
Inventories | 6,539 | 7,532 | |||||
Prepaid expenses and other assets | 7,265 | 4,823 | |||||
Total current assets | 97,117 | 87,365 | |||||
Property and equipment, net | 7,565 | 7,577 | |||||
Other assets | 702 | 602 | |||||
Total assets | $ | 105,384 | $ | 95,544 | |||
Liabilities and stockholders' equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 33,255 | $ | 24,092 | |||
Accrued compensation | 4,922 | 3,441 | |||||
Accrued expenses | 8,935 | 7,509 | |||||
Deferred revenue | 4,211 | 5,045 | |||||
Credit facility borrowings | 2,000 | — | |||||
Total current liabilities | 53,323 | 40,087 | |||||
Other long-term liabilities | 4,414 | 4,276 | |||||
Total liabilities | 57,737 | 44,363 | |||||
Stockholders' equity: | |||||||
Preferred stock | — | — | |||||
Common stock | 59 | 60 | |||||
Additional paid-in capital | 330,103 | 334,155 | |||||
Accumulated other comprehensive loss | (3,254 | ) | (3,283 | ) | |||
Accumulated deficit | (279,261 | ) | (279,751 | ) | |||
Total stockholders' equity | 47,647 | 51,181 | |||||
Total liabilities and stockholders' equity | $ | 105,384 | $ | 95,544 |
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, 2013 | March 31, 2014 | June 30, 2014 | |||||||||
Cash Flows From Operating Activities: | |||||||||||
Net income (loss) | $ | 2,077 | $ | (412 | ) | $ | (78 | ) | |||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 754 | 959 | 932 | ||||||||
Stock-based compensation expense | 689 | 578 | 1,054 | ||||||||
Provision for bad debt expense | (5 | ) | — | 2 | |||||||
Write-off of fixed assets | — | — | 5 | ||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable | (6,574 | ) | 9,240 | 621 | |||||||
Inventories | 748 | (1,122 | ) | 87 | |||||||
Prepaid expenses and other assets | 26 | 1,238 | 1,306 | ||||||||
Accounts payable | 1,667 | (7,112 | ) | (2,010 | ) | ||||||
Accrued compensation and other expenses | 2,238 | (2,809 | ) | (404 | ) | ||||||
Deferred revenue | 416 | 799 | 32 | ||||||||
Other long-term liabilities | 18 | (252 | ) | 109 | |||||||
Net cash provided by operating activities | 2,054 | 1,107 | 1,656 | ||||||||
Cash Flows From Investing Activities: | |||||||||||
Purchases of property and equipment | (1,132 | ) | (995 | ) | (437 | ) | |||||
Net cash used in investing activities | (1,132 | ) | (995 | ) | (437 | ) | |||||
Cash Flows From Financing Activities: | |||||||||||
Payments on bank borrowings | (2,800 | ) | (2,000 | ) | — | ||||||
Proceeds from bank borrowings | 2,100 | — | — | ||||||||
Shares withheld for tax purposes | (101 | ) | (72 | ) | (8 | ) | |||||
Proceeds from sale of stock to employees | 41 | 1,854 | 646 | ||||||||
Net cash provided by (used in) financing activities | (760 | ) | (218 | ) | 638 | ||||||
Effect of Exchange Rate Changes on Cash and Cash Equivalents | (57 | ) | 22 | 17 | |||||||
Net Increase (Decrease) in Cash and Cash Equivalents | 105 | (84 | ) | 1,874 | |||||||
Cash and Cash Equivalents, beginning of period | 40,297 | 40,406 | 40,322 | ||||||||
Cash and Cash Equivalents, end of period | $ | 40,402 | $ | 40,322 | $ | 42,196 | |||||
Supplemental Disclosures of Non-Cash Investing and Financing Activities: | |||||||||||
Capital assets acquired but not paid | $ | 308 | $ | 995 | $ | 345 | |||||
Supplemental Cash Flow Data: | |||||||||||
Cash paid for income taxes | $ | 67 | $ | 195 | $ | 65 |
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, 2013 | March 31, 2014 | June 30, 2014 | June 30, 2013 | June 30, 2014 | |||||||||||||||
GAAP net revenue from continuing operations | $ | 50,683 | $ | 48,207 | $ | 48,222 | $ | 95,163 | $ | 96,429 | |||||||||
GAAP revenue from discontinued operations | 2 | — | — | 22 | — | ||||||||||||||
GAAP net revenue from continuing and discontinued operations | $ | 50,685 | $ | 48,207 | $ | 48,222 | $ | 95,185 | $ | 96,429 | |||||||||
AssuredUVS revenue | (2 | ) | — | — | (22 | ) | — | ||||||||||||
Long-term software contract royalties | 550 | 653 | 203 | 951 | 856 | ||||||||||||||
Non-GAAP net revenue | $ | 51,233 | $ | 48,860 | $ | 48,425 | $ | 96,114 | $ | 97,285 | |||||||||
GAAP gross profit from continuing operations | $ | 17,007 | $ | 15,265 | $ | 16,023 | $ | 31,447 | $ | 31,288 | |||||||||
GAAP gross margin % from continuing operations | 33.6 | % | 31.7 | % | 33.2 | % | 33.0 | % | 32.4 | % | |||||||||
GAAP gross profit (loss) from discontinued operations | (9 | ) | — | — | (120 | ) | — | ||||||||||||
GAAP gross profit from continuing and discontinued operations | $ | 16,998 | $ | 15,265 | $ | 16,023 | $ | 31,327 | $ | 31,288 | |||||||||
GAAP gross margin % from continuing and discontinued operations | 33.5 | % | 31.7 | % | 33.2 | % | 32.9 | % | 32.4 | % | |||||||||
Stock-based compensation | 83 | 64 | 95 | 179 | 159 | ||||||||||||||
Severance costs | — | 73 | 2 | 23 | 75 | ||||||||||||||
Power supply component failures | 32 | — | — | (776 | ) | — | |||||||||||||
AssuredUVS revenue | (2 | ) | — | — | (22 | ) | — | ||||||||||||
AssuredUVS expenses | 11 | — | — | 140 | — | ||||||||||||||
Long-term software contract royalties | 550 | 653 | 203 | 951 | 856 | ||||||||||||||
Long-term software contract costs | 89 | 123 | 117 | 345 | 240 | ||||||||||||||
Non-GAAP gross profit | $ | 17,761 | $ | 16,178 | $ | 16,440 | $ | 32,167 | $ | 32,618 | |||||||||
Non-GAAP gross margin % | 34.7 | % | 33.1 | % | 33.9 | % | 33.5 | % | 33.5 | % | |||||||||
GAAP sales and marketing expenses from continuing operations | $ | 3,187 | $ | 3,294 | $ | 3,843 | $ | 6,295 | $ | 7,137 | |||||||||
GAAP contribution margin from continuing operations | $ | 13,820 | $ | 11,971 | $ | 12,180 | $ | 25,152 | $ | 24,151 | |||||||||
GAAP contribution margin % from continuing operations | 27.3 | % | 24.8 | % | 25.3 | % | 26.4 | % | 25.0 | % | |||||||||
Stock-based compensation | (72 | ) | (72 | ) | (99 | ) | (148 | ) | (171 | ) | |||||||||
Severance costs | — | (42 | ) | — | (5 | ) | (42 | ) | |||||||||||
Non-GAAP sales and marketing expenses | $ | 3,115 | $ | 3,180 | $ | 3,744 | $ | 6,142 | $ | 6,924 | |||||||||
Non-GAAP contribution margin | $ | 14,646 | $ | 12,998 | $ | 12,696 | $ | 26,025 | $ | 25,694 | |||||||||
Non-GAAP contribution margin % | 28.6 | % | 26.6 | % | 26.2 | % | 27.1 | % | 26.4 | % | |||||||||
GAAP operating expenses from continuing operations | $ | 14,862 | $ | 15,668 | $ | 16,034 | $ | 29,820 | $ | 31,702 | |||||||||
GAAP operating expenses from discontinued operations | 3 | — | — | 313 | — | ||||||||||||||
GAAP operating expenses from continuing and discontinued operations | $ | 14,865 | $ | 15,668 | $ | 16,034 | $ | 30,133 | $ | 31,702 | |||||||||
Currency (loss) gain | (18 | ) | 73 | 28 | (361 | ) | 101 | ||||||||||||
Stock-based compensation | (606 | ) | (514 | ) | (959 | ) | (1,178 | ) | (1,473 | ) | |||||||||
AssuredUVS expenses | (5 | ) | — | — | (358 | ) | — | ||||||||||||
Long-term software contract deferred costs | 6 | — | — | 406 | — | ||||||||||||||
Restructuring recoveries | — | — | — | 10 | — | ||||||||||||||
Legal fees related to power supply component failure | (1 | ) | — | — | (2 | ) | — | ||||||||||||
Severance costs | — | (83 | ) | — | (82 | ) | (83 | ) | |||||||||||
Non-GAAP operating expenses | $ | 14,241 | $ | 15,144 | $ | 15,103 | $ | 28,568 | $ | 30,247 | |||||||||
GAAP net income (loss) from continuing operations | $ | 2,089 | $ | (412 | ) | $ | (78 | ) | $ | 1,529 | $ | (490 | ) | ||||||
GAAP net loss from discontinued operations | (12 | ) | — | — | (433 | ) | — | ||||||||||||
GAAP net income (loss) from continuing and discontinued operations | $ | 2,077 | $ | (412 | ) | $ | (78 | ) | $ | 1,096 | $ | (490 | ) | ||||||
Currency loss (gain) | 18 | (73 | ) | (28 | ) | 361 | (101 | ) | |||||||||||
Stock-based compensation | 689 | 578 | 1,054 | 1,357 | 1,632 | ||||||||||||||
Restructuring recoveries | — | — | — | (10 | ) | — | |||||||||||||
Power supply component failures | 33 | — | — | (774 | ) | — | |||||||||||||
AssuredUVS expenses | 16 | — | — | 498 | — | ||||||||||||||
AssuredUVS revenue | (2 | ) | — | — | (22 | ) | — | ||||||||||||
Other income | — | (10 | ) | (17 | ) | — | (27 | ) | |||||||||||
Long-term software contract royalties | 550 | 653 | 203 | 951 | 856 | ||||||||||||||
Long-term software contract costs | 89 | 123 | 117 | 345 | 240 | ||||||||||||||
Long-term software contract deferred costs | (6 | ) | — | — | (406 | ) | — | ||||||||||||
Severance costs | — | 156 | 2 | 105 | 158 | ||||||||||||||
Non-GAAP net income | $ | 3,464 | $ | 1,015 | $ | 1,253 | $ | 3,501 | $ | 2,268 | |||||||||
Non-GAAP net income per share | |||||||||||||||||||
Basic and diluted | $ | 0.06 | $ | 0.02 | $ | 0.02 | $ | 0.06 | $ | 0.04 | |||||||||
Weighted average shares used to calculate net income per share: | |||||||||||||||||||
Basic | 58,384 | 59,678 | 60,159 | 58,194 | 59,920 | ||||||||||||||
Diluted | 58,797 | 63,912 | 63,806 | 58,616 | 63,834 | ||||||||||||||
Non-GAAP net income | $ | 3,464 | $ | 1,015 | $ | 1,253 | $ | 3,501 | $ | 2,268 | |||||||||
Interest expense less AssuredUVS | 8 | 18 | 4 | 15 | 22 | ||||||||||||||
Income tax expense | 49 | 1 | 74 | 83 | 75 | ||||||||||||||
Depreciation less AssuredUVS | 757 | 959 | 932 | 1,463 | 1,891 | ||||||||||||||
Non-GAAP EBITDA | $ | 4,278 | $ | 1,993 | $ | 2,263 | $ | 5,062 | $ | 4,256 |
DOT HILL SYSTEMS CORP. | |||||||
UNAUDITED RECONCILIATION OF CONSOLIDATED NON-GAAP MEASURES FOR NET REVENUE FOR TRAILING 12 MONTHS | |||||||
(In thousands) | |||||||
Q3 12 through Q2 13 | Q3 13 through Q2 14 | ||||||
Total GAAP net revenue from continuing operations | $ | 187,405 | $ | 207,831 | |||
GAAP revenue from discontinued operations | 176 | 28 | |||||
Total GAAP net revenue, from continuing and discontinued operations | $ | 187,581 | $ | 207,859 | |||
AssuredUVS revenue | (176 | ) | (28 | ) | |||
Long-term software contract royalties | 3,092 | 2,084 | |||||
Total non-GAAP net revenue | $ | 190,497 | $ | 209,915 | |||
Server OEM GAAP net revenue from continuing operations | $ | 129,414 | $ | 128,332 | |||
Long-term software contract royalties | 3,092 | 2,084 | |||||
Server OEM non-GAAP net revenue | $ | 132,506 | $ | 130,416 | |||
Vertical Markets GAAP net revenue from continuing operations | $ | 57,991 | $ | 79,499 | |||
GAAP revenue from discontinued operations | 176 | 28 | |||||
Vertical Markets GAAP net revenue, from continuing and discontinued operations | $ | 58,167 | $ | 79,527 | |||
AssuredUVS revenue | (176 | ) | (28 | ) | |||
Vertical Markets non-GAAP net revenue | $ | 57,991 | $ | 79,499 |
DOT HILL SYSTEMS CORP. | |||||||||||||||||||
UNAUDITED RECONCILIATION OF CONSOLIDATED NON-GAAP MEASURES FOR SERVER OEM SEGMENT | |||||||||||||||||||
(In thousands) | |||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||
June 30, 2013 | March 31, 2014 | June 30, 2014 | June 30, 2013 | June 30, 2014 | |||||||||||||||
Server OEM GAAP net revenue from continuing operations | $ | 29,400 | $ | 25,854 | $ | 27,463 | $ | 59,783 | $ | 53,317 | |||||||||
Long-term software contract royalties | 550 | 653 | 203 | 951 | 856 | ||||||||||||||
Server OEM non-GAAP net revenue | $ | 29,950 | $ | 26,507 | $ | 27,666 | $ | 60,734 | $ | 54,173 | |||||||||
Server OEM GAAP gross profit from continuing operations | $ | 7,843 | $ | 5,604 | $ | 6,783 | $ | 16,126 | $ | 12,387 | |||||||||
Server OEM GAAP gross margin % from continuing operations | 26.7 | % | 21.7 | % | 24.7 | % | 27.0 | % | 23.2 | % | |||||||||
Stock-based compensation | 52 | 41 | 59 | 130 | 100 | ||||||||||||||
Severance costs | — | 47 | 2 | 14 | 49 | ||||||||||||||
Power supply component failures | 32 | — | — | (776 | ) | — | |||||||||||||
Long-term software contract royalties | 550 | 653 | 203 | 951 | 856 | ||||||||||||||
Long-term software contract costs | 89 | 123 | 117 | 345 | 240 | ||||||||||||||
Server OEM non-GAAP gross profit | $ | 8,566 | $ | 6,468 | $ | 7,164 | $ | 16,790 | $ | 13,632 | |||||||||
Server OEM non-GAAP gross margin % | 28.6 | % | 24.4 | % | 25.9 | % | 27.6 | % | 25.2 | % | |||||||||
Server OEM GAAP sales and marketing expenses from continuing operations | $ | 573 | $ | 482 | $ | 541 | $ | 1,008 | $ | 1,023 | |||||||||
Server OEM GAAP contribution margin from continuing operations | $ | 7,270 | $ | 5,122 | $ | 6,242 | $ | 15,118 | $ | 11,364 | |||||||||
Server OEM GAAP contribution margin % from continuing operations | 24.7 | % | 19.8 | % | 22.7 | % | 25.3 | % | 21.3 | % | |||||||||
Stock-based compensation | (15 | ) | (15 | ) | (21 | ) | (31 | ) | (36 | ) | |||||||||
Severance costs | — | (9 | ) | — | (1 | ) | (9 | ) | |||||||||||
Server OEM non-GAAP sales and marketing expenses | $ | 558 | $ | 458 | $ | 520 | $ | 976 | $ | 978 | |||||||||
Server OEM non-GAAP contribution margin | $ | 8,008 | $ | 6,010 | $ | 6,644 | $ | 15,814 | $ | 12,654 | |||||||||
Server OEM non-GAAP contribution margin % | 26.7 | % | 22.7 | % | 24.0 | % | 26.0 | % | 23.4 | % | |||||||||
Server OEM GAAP operating income for continuing operations | $ | 7,270 | $ | 5,122 | $ | 6,242 | $ | 15,118 | $ | 11,364 | |||||||||
Stock-based compensation | 67 | 56 | 80 | 161 | 136 | ||||||||||||||
Severance costs | — | 56 | 2 | 15 | 58 | ||||||||||||||
Power supply component failures | 32 | — | — | (776 | ) | — | |||||||||||||
Long-term software contract royalties | 550 | 653 | 203 | 951 | 856 | ||||||||||||||
Long-term software contract costs | 89 | 123 | 117 | 345 | 240 | ||||||||||||||
Server OEM non-GAAP operating income | $ | 8,008 | $ | 6,010 | $ | 6,644 | $ | 15,814 | $ | 12,654 |
DOT HILL SYSTEMS CORP. | |||||||||||||||||||
UNAUDITED RECONCILIATION OF CONSOLIDATED NON-GAAP MEASURES FOR VERTICAL MARKETS SEGMENT | |||||||||||||||||||
(In thousands) | |||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||
June 30, 2013 | March 31, 2014 | June 30, 2014 | June 30, 2013 | June 30, 2014 | |||||||||||||||
Vertical Markets GAAP net revenue from continuing operations | $ | 21,283 | $ | 22,353 | $ | 20,759 | $ | 35,380 | $ | 43,112 | |||||||||
GAAP revenue from discontinued operations | 2 | — | — | 22 | — | ||||||||||||||
Vertical Markets GAAP net revenue from continuing and discontinued operations | $ | 21,285 | $ | 22,353 | $ | 20,759 | $ | 35,402 | $ | 43,112 | |||||||||
AssuredUVS revenue | (2 | ) | — | — | (22 | ) | — | ||||||||||||
Vertical Markets non-GAAP net revenue | $ | 21,283 | $ | 22,353 | $ | 20,759 | $ | 35,380 | $ | 43,112 | |||||||||
Vertical Markets GAAP gross profit from continuing operations | $ | 9,164 | $ | 9,661 | $ | 9,240 | $ | 15,321 | $ | 18,901 | |||||||||
Vertical Markets GAAP gross margin % from continuing operations | 43.1 | % | 43.2 | % | 44.5 | % | 43.3 | % | 43.8 | % | |||||||||
Vertical Markets GAAP gross profit (loss) from discontinued operations | (9 | ) | — | — | (120 | ) | — | ||||||||||||
Vertical Markets GAAP gross profit from continuing and discontinued operations | $ | 9,155 | $ | 9,661 | $ | 9,240 | $ | 15,201 | $ | 18,901 | |||||||||
Vertical Markets GAAP gross margin % from continuing and discontinued operations | 43.0 | % | 43.2 | % | 44.5 | % | 42.9 | % | 43.8 | % | |||||||||
Stock-based compensation | 31.0 | 23.0 | 36.0 | 49.0 | 58.0 | ||||||||||||||
Severance costs | — | 26 | — | 9 | 27 | ||||||||||||||
AssuredUVS revenue | (2 | ) | — | — | (22 | ) | — | ||||||||||||
AssuredUVS expenses | 11 | — | — | 140 | — | ||||||||||||||
Vertical Markets non-GAAP gross profit | $ | 9,195 | $ | 9,710 | $ | 9,276 | $ | 15,377 | $ | 18,986 | |||||||||
Vertical Markets non-GAAP gross margin % | 43.2 | % | 43.4 | % | 44.7 | % | 43.5 | % | 44 | % | |||||||||
Vertical Markets GAAP sales and marketing expenses from continuing operations | $ | 1,996 | $ | 2,254 | $ | 2,478 | $ | 4,076 | $ | 4,732 | |||||||||
Vertical Markets GAAP contribution margin from continuing operations | $ | 7,168 | $ | 7,407 | $ | 6,762 | $ | 11,245 | $ | 14,169 | |||||||||
Vertical Markets GAAP contribution margin % from continuing operations | 33.7 | % | 33.1 | % | 32.6 | % | 31.8 | % | 32.9 | % | |||||||||
Stock-based compensation | (33 | ) | (33 | ) | (45 | ) | (68 | ) | (78 | ) | |||||||||
Severance costs | — | (19 | ) | — | (2 | ) | (19 | ) | |||||||||||
Vertical Markets non-GAAP sales and marketing expenses | $ | 1,963 | $ | 2,202 | $ | 2,433 | $ | 4,006 | $ | 4,635 | |||||||||
Vertical Markets non-GAAP contribution margin | $ | 7,232 | $ | 7,508 | $ | 6,843 | $ | 11,371 | $ | 14,351 | |||||||||
Vertical Markets non-GAAP contribution margin % | 34.0 | % | 33.6 | % | 33.0 | % | 32.1 | % | 33.3 | % | |||||||||
Vertical Markets GAAP operating income for continuing operations | $ | 7,168 | $ | 7,407 | $ | 6,762 | $ | 11,245 | $ | 14,169 | |||||||||
Vertical Markets GAAP operating loss for discontinued operations | (9 | ) | — | — | (120 | ) | — | ||||||||||||
Vertical Markets GAAP operating income for continuing and discontinued operations | $ | 7,159 | $ | 7,407 | $ | 6,762 | $ | 11,125 | $ | 14,169 | |||||||||
Stock-based compensation | 64 | 56 | 81 | 117 | 136 | ||||||||||||||
Severance costs | — | 45 | — | 11 | 46 | ||||||||||||||
AssuredUVS revenue | (2 | ) | — | — | (22 | ) | — | ||||||||||||
AssuredUVS expenses | 11 | — | — | 140 | — | ||||||||||||||
Vertical Markets non-GAAP operating income | $ | 7,232 | $ | 7,508 | $ | 6,843 | $ | 11,371 | $ | 14,351 |
DOT HILL SYSTEMS CORP. | |||||||||||||||||||
UNAUDITED RECONCILIATION OF CONSOLIDATED NON-GAAP MEASURES FOR CORPORATE SEGMENT | |||||||||||||||||||
(In thousands) | |||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||
June 30, 2013 | March 31, 2014 | June 30, 2014 | June 30, 2013 | June 30, 2014 | |||||||||||||||
Corporate GAAP sales and marketing expenses from continuing operations | $ | 618 | $ | 558 | $ | 824 | $ | 1,211 | $ | 1,382 | |||||||||
Corporate GAAP contribution margin from continuing operations | $ | (618 | ) | $ | (558 | ) | $ | (824 | ) | $ | (1,211 | ) | $ | (1,382 | ) | ||||
Stock-based compensation | (24 | ) | (24 | ) | (33 | ) | (49 | ) | (57 | ) | |||||||||
Severance costs | — | (14 | ) | — | (2 | ) | (14 | ) | |||||||||||
Corporate non-GAAP sales and marketing expenses | $ | 594 | $ | 520 | $ | 791 | $ | 1,160 | $ | 1,311 | |||||||||
Corporate non-GAAP contribution margin | $ | (594 | ) | $ | (520 | ) | $ | (791 | ) | $ | (1,160 | ) | $ | (1,311 | ) | ||||
Corporate GAAP research and development expenses from continuing operations | $ | 8,908 | $ | 9,476 | $ | 9,340 | $ | 17,621 | $ | 18,816 | |||||||||
Stock-based compensation | (203 | ) | (260 | ) | (347 | ) | (577 | ) | (607 | ) | |||||||||
Long-term software contract deferred costs | 6 | — | — | 406 | — | ||||||||||||||
Severance costs | — | (40 | ) | — | (77 | ) | (40 | ) | |||||||||||
Corporate non-GAAP research and development expenses | $ | 8,711 | $ | 9,176 | $ | 8,993 | $ | 17,373 | $ | 18,169 | |||||||||
Corporate GAAP general & administrative expenses from continuing operations | $ | 2,767 | $ | 2,898 | $ | 2,851 | $ | 5,904 | $ | 5,749 | |||||||||
Corporate GAAP general & administrative expenses from discontinued operations | 3 | — | — | 313 | — | ||||||||||||||
Corporate GAAP general & administrative expenses from continuing and discontinued operations | $ | 2,770 | $ | 2,898 | $ | 2,851 | $ | 6,217 | $ | 5,749 | |||||||||
Currency loss (gain) | (18 | ) | 73 | 28 | (361 | ) | 101 | ||||||||||||
Stock-based compensation | (331 | ) | (182 | ) | (513 | ) | (453 | ) | (695 | ) | |||||||||
AssuredUVS expenses | (5 | ) | — | — | (358 | ) | — | ||||||||||||
Restructuring recoveries | — | — | — | 10 | — | ||||||||||||||
Legal fees related to power supply component failure | (1 | ) | — | — | (2 | ) | — | ||||||||||||
Severance costs | — | (1 | ) | — | — | (1 | ) | ||||||||||||
Corporate non-GAAP general & administrative expenses | $ | 2,415 | $ | 2,788 | $ | 2,366 | $ | 5,053 | $ | 5,154 | |||||||||
Corporate GAAP operating loss from continuing operations | $ | (12,293 | ) | $ | (12,932 | ) | $ | (13,015 | ) | $ | (24,736 | ) | $ | (25,947 | ) | ||||
Corporate GAAP operating loss from discontinued operations | (3 | ) | — | — | (313 | ) | — | ||||||||||||
Corporate GAAP operating loss from continuing and discontinued operations | $ | (12,296 | ) | $ | (12,932 | ) | $ | (13,015 | ) | $ | (25,049 | ) | $ | (25,947 | ) | ||||
Currency loss (gain) | 18 | (73 | ) | (28 | ) | 361 | (101 | ) | |||||||||||
Stock-based compensation | 558 | 466 | 893 | 1,079 | 1,359 | ||||||||||||||
AssuredUVS expenses | 5 | — | — | 358 | — | ||||||||||||||
Long-term software contract deferred costs | (6 | ) | — | — | (406 | ) | — | ||||||||||||
Restructuring recoveries | — | — | — | (10 | ) | — | |||||||||||||
Legal fees related to power supply component failure | 1 | — | — | 2 | — | ||||||||||||||
Severance costs | — | 55 | — | 79 | 55 | ||||||||||||||
Corporate non-GAAP operating loss | $ | (11,720 | ) | $ | (12,484 | ) | $ | (12,150 | ) | $ | (23,586 | ) | $ | (24,634 | ) |
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, 2013 | March 31, 2014 | June 30, 2014 | June 30, 2013 | June 30, 2014 | |||||||||||||||
GAAP income (loss) per share from continuing operations | $ | 0.04 | $ | (0.01 | ) | $ | (0.00 | ) | $ | 0.03 | $ | (0.01 | ) | ||||||
GAAP loss per share from discontinued operations | (0.00 | ) | — | — | (0.01 | ) | — | ||||||||||||
GAAP income (loss) per share from continuing and discontinued operations* | $ | 0.04 | $ | (0.01 | ) | $ | (0.00 | ) | $ | 0.02 | $ | (0.01 | ) | ||||||
Currency loss | 0.00 | (0.00 | ) | (0.00 | ) | 0.01 | 0.00 | ||||||||||||
Stock-based compensation | 0.01 | 0.01 | 0.02 | 0.02 | 0.03 | ||||||||||||||
Power supply component failures | 0.00 | — | — | (0.01 | ) | — | |||||||||||||
AssuredUVS expenses | 0.00 | — | — | 0.01 | — | ||||||||||||||
Long-term software contract royalties | 0.01 | 0.01 | 0.00 | 0.02 | 0.01 | ||||||||||||||
Long-term software contract costs | 0.00 | 0.00 | 0.00 | 0.01 | 0.00 | ||||||||||||||
Long-term software contract deferred costs | (0.00 | ) | — | — | (0.01 | ) | — | ||||||||||||
Other adjustments | — | 0.01 | — | — | 0.01 | ||||||||||||||
Non-GAAP income per share* | $ | 0.06 | $ | 0.02 | $ | 0.02 | $ | 0.06 | $ | 0.04 | |||||||||
Weighted average shares used to calculate earnings per share: | |||||||||||||||||||
Basic | 58,384 | 59,678 | 60,159 | 58,194 | 59,920 | ||||||||||||||
Diluted | 58,797 | 63,912 | 63,806 | 58,616 | 63,834 | ||||||||||||||
* Per share data may not always add to the total for the period because each figure is independently calculated. |