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 November 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 November 6, 2014. |
• | Third Quarter Revenue and EPS within Guidance |
• | Grew trailing 12 month as of September 30, 2014 relative to trailing 12 month as of September 30, 2013 non-GAAP revenue by 7%, with Vertical Markets growing 28% over the same period. |
• | Awarded three new patents, which brings Dot Hill’s total US portfolio to 99 patents. |
• | Unveiled the latest version of its storage management software, RealStor™ version 2.0, which delivers application workload-aware intelligence for today’s next-generation hybrid flash storage arrays. |
• | Announced the Ultra48™ AssuredSAN® ultra-density, next-generation hybrid arrays, available with RealStor™ 2.0 software. |
• | The Company recognized GAAP net revenue of $52.1 million for the third quarter of 2014, compared to $52.6 million for the third quarter of 2013 and $48.2 million for the second quarter of 2014. |
• | GAAP gross margin for the third quarter of 2014 was 32.5%, compared to 32.1% for the third quarter of 2013 and 33.2% for the second quarter of 2014. |
• | GAAP operating expenses for the third quarter of 2014 were $16.9 million, as compared to $15.0 million for the third quarter of 2013 and $16.0 million in the second quarter of 2014. |
• | GAAP net income for the third quarter of 2014 was $0.04 million, or $0.00 per fully diluted share, as compared to $1.8 million, or $0.03 per fully diluted share, for the third quarter of 2013, and a net loss of $0.08 million, or ($0.00) per share, for the second quarter of 2014. |
• | The Company recognized non-GAAP net revenue of $52.0 million for the third quarter of 2014, as compared to $52.9 million for the third quarter of 2013 and $48.4 million for the second quarter of 2014. |
◦ | Vertical Markets non-GAAP net revenue was $20.5 million, compared to $17.5 million in the third quarter of 2013 and $20.8 million in the second quarter of 2014. |
◦ | Server OEM non-GAAP net revenue was $31.5 million, compared to $35.4 million in the third quarter of 2013 and $27.7 million in the second quarter of 2014. |
• | Non-GAAP gross margin for the third quarter of 2014 was 32.4%, compared to 32.8% for the third quarter of 2013 and 33.9% for the second quarter of 2014. The Company stated that the sequential decline in non-GAAP gross margin percent was largely due to customer mix. |
◦ | Vertical Markets non-GAAP gross margin was 43.3%, compared to 45.4% in the third quarter of 2013 and 44.7% in the second quarter of 2014. |
◦ | Server OEM non-GAAP gross margin was 25.4%, compared to 26.5% in the third quarter of 2013 and 25.9% in the second quarter of 2014. |
• | Non-GAAP operating expenses for the third quarter of 2014 were $15.1 million, as compared to $14.5 million for the third quarter of 2013 and $15.1 million in the second quarter of 2014. |
• | Vertical Markets non-GAAP contribution margin was 30.9% for the third quarter of 2014, compared to 32.0% in the third quarter of 2013 and 33.0% in the second quarter of 2014. |
• | Server OEM non-GAAP contribution margin was 23.8% for the third quarter of 2014, compared to 25.2% in the third quarter of 2013 and 24.0% in the second quarter of 2014. |
DOT HILL SYSTEMS CORP. | |||||||||||||||||||
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||
(In thousands, except per share amounts) | |||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||
September 30, 2013 | June 30, 2014 | September 30, 2014 | September 30, 2013 | September 30, 2014 | |||||||||||||||
Net revenue | $ | 52,603 | $ | 48,222 | $ | 52,121 | $ | 147,766 | $ | 148,550 | |||||||||
Cost of goods sold | 35,730 | 32,199 | 35,159 | 99,446 | 100,300 | ||||||||||||||
Gross profit | 16,873 | 16,023 | 16,962 | 48,320 | 48,250 | ||||||||||||||
Operating expenses: | |||||||||||||||||||
Research and development | 8,972 | 9,340 | 9,516 | 26,593 | 28,332 | ||||||||||||||
Sales and marketing | 3,512 | 3,843 | 3,522 | 9,807 | 10,659 | ||||||||||||||
General and administrative | 2,512 | 2,851 | 3,836 | 8,416 | 9,585 | ||||||||||||||
Total operating expenses | 14,996 | 16,034 | 16,874 | 44,816 | 48,576 | ||||||||||||||
Operating income (loss) | 1,877 | (11 | ) | 88 | 3,504 | (326 | ) | ||||||||||||
Other income (expense): | |||||||||||||||||||
Interest income (expense), net | (1 | ) | (4 | ) | (4 | ) | (16 | ) | (26 | ) | |||||||||
Other income (expense), net | (1 | ) | 11 | 2 | (1 | ) | 23 | ||||||||||||
Total other income (expense), net | (2 | ) | 7 | (2 | ) | (17 | ) | (3 | ) | ||||||||||
Income (loss) before income taxes and discontinued operations | 1,875 | (4 | ) | 86 | 3,487 | (329 | ) | ||||||||||||
Income tax expense | 100 | 74 | 46 | 183 | 121 | ||||||||||||||
Income (loss) from continuing operations | 1,775 | (78 | ) | 40 | 3,304 | (450 | ) | ||||||||||||
Loss from discontinued operations | (18 | ) | — | — | (452 | ) | — | ||||||||||||
Net income (loss) | $ | 1,757 | $ | (78 | ) | $ | 40 | $ | 2,852 | $ | (450 | ) | |||||||
Continuing operations: | |||||||||||||||||||
Basic and diluted earnings (loss) per share | $ | 0.03 | $ | (0.00 | ) | $ | 0.00 | $ | 0.06 | $ | (0.01 | ) | |||||||
Discontinued operations: | |||||||||||||||||||
Basic and diluted loss per share | $ | (0.00 | ) | $ | — | $ | — | $ | (0.01 | ) | $ | — | |||||||
Net income (loss): | |||||||||||||||||||
Basic and diluted income (loss) per share* | $ | 0.03 | $ | (0.00 | ) | $ | 0.00 | $ | 0.05 | $ | (0.01 | ) | |||||||
Weighted average shares used to calculate net income (loss) per share: | |||||||||||||||||||
Basic | 58,736 | 60,159 | 60,396 | 58,376 | 60,021 | ||||||||||||||
Diluted | 60,062 | 60,159 | 63,755 | 58,879 | 60,021 | ||||||||||||||
* 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 | September 30, 2014 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 40,406 | $ | 42,369 | |||
Accounts receivable, net | 42,907 | 36,921 | |||||
Inventories | 6,539 | 6,985 | |||||
Prepaid expenses and other assets | 7,265 | 7,749 | |||||
Total current assets | 97,117 | 94,024 | |||||
Property and equipment, net | 7,565 | 8,827 | |||||
Intangible assets | — | 1,235 | |||||
Other assets | 702 | 483 | |||||
Total assets | $ | 105,384 | $ | 104,569 | |||
Liabilities and stockholders' equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 33,255 | $ | 30,873 | |||
Accrued compensation | 4,922 | 3,266 | |||||
Accrued expenses | 8,935 | 7,912 | |||||
Deferred revenue | 4,211 | 5,272 | |||||
Credit facility borrowings | 2,000 | — | |||||
Total current liabilities | 53,323 | 47,323 | |||||
Other long-term liabilities | 4,414 | 4,706 | |||||
Total liabilities | 57,737 | 52,029 | |||||
Stockholders' equity: | |||||||
Preferred stock | — | — | |||||
Common stock | 59 | 60 | |||||
Additional paid-in capital | 330,103 | 335,423 | |||||
Accumulated other comprehensive loss | (3,254 | ) | (3,232 | ) | |||
Accumulated deficit | (279,261 | ) | (279,711 | ) | |||
Total stockholders' equity | 47,647 | 52,540 | |||||
Total liabilities and stockholders' equity | $ | 105,384 | $ | 104,569 |
DOT HILL SYSTEMS CORP. | |||||||||||
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||
(INCLUDES RESULTS FROM BOTH DISCONTINUED AND CONTINUING OPERATIONS) | |||||||||||
(In thousands) | |||||||||||
Three Months Ended | |||||||||||
September 30, 2013 | June 30, 2014 | September 30, 2014 | |||||||||
Cash Flows From Operating Activities: | |||||||||||
Net income (loss) | $ | 1,757 | $ | (78 | ) | $ | 40 | ||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 852 | 932 | 989 | ||||||||
Stock-based compensation expense | 560 | 1,054 | 765 | ||||||||
Provision for bad debt expense | 7 | 2 | 65 | ||||||||
Write-off of property and equipment | — | 5 | — | ||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable | (1,108 | ) | 621 | (4,247 | ) | ||||||
Inventories | (2,236 | ) | 87 | 547 | |||||||
Prepaid expenses and other assets | (751 | ) | 1,306 | (2,812 | ) | ||||||
Accounts payable | 2,413 | (2,010 | ) | 5,467 | |||||||
Accrued compensation and other expenses | 478 | (404 | ) | 390 | |||||||
Deferred revenue | 244 | 32 | 234 | ||||||||
Other long-term liabilities | (9 | ) | 109 | 441 | |||||||
Net cash provided by operating activities | 2,207 | 1,656 | 1,879 | ||||||||
Cash Flows From Investing Activities: | |||||||||||
Purchases of property and equipment | (600 | ) | (437 | ) | (1,596 | ) | |||||
Purchase of intangible assets | — | — | (545 | ) | |||||||
Net cash used in investing activities | (600 | ) | (437 | ) | (2,141 | ) | |||||
Cash Flows From Financing Activities: | |||||||||||
Proceeds from bank borrowings | (2,100 | ) | — | — | |||||||
Shares withheld for tax purposes | (7 | ) | (8 | ) | (12 | ) | |||||
Proceeds from sale of stock to employees | 380 | 646 | 516 | ||||||||
Net cash provided by (used in) financing activities | (1,727 | ) | 638 | 504 | |||||||
Effect of Exchange Rate Changes on Cash and Cash Equivalents | 75 | 17 | (69 | ) | |||||||
Net Increase (Decrease) in Cash and Cash Equivalents | (45 | ) | 1,874 | 173 | |||||||
Cash and Cash Equivalents, beginning of period | 40,402 | 40,322 | 42,196 | ||||||||
Cash and Cash Equivalents, end of period | $ | 40,357 | $ | 42,196 | $ | 42,369 | |||||
Supplemental Disclosures of Non-Cash Investing and Financing Activities: | |||||||||||
Capital assets acquired but not paid | $ | 340 | $ | 345 | $ | 1,652 | |||||
Supplemental Cash Flow Data: | |||||||||||
Cash paid (refunded) for income taxes | $ | (9 | ) | $ | 65 | $ | (15 | ) |
DOT HILL SYSTEMS CORP. | |||||||||||||||||||
UNAUDITED RECONCILIATION OF CONSOLIDATED NON-GAAP MEASURES | |||||||||||||||||||
(In thousands, except per share amounts) | |||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||
September 30, 2013 | June 30, 2014 | September 30, 2014 | September 30, 2013 | September 30, 2014 | |||||||||||||||
GAAP net revenue from continuing operations | $ | 52,603 | $ | 48,222 | $ | 52,121 | $ | 147,766 | $ | 148,550 | |||||||||
GAAP revenue from discontinued operations | 18 | — | — | 40 | — | ||||||||||||||
GAAP net revenue from continuing and discontinued operations | $ | 52,621 | $ | 48,222 | $ | 52,121 | $ | 147,806 | $ | 148,550 | |||||||||
AssuredUVS revenue | (18 | ) | — | — | (40 | ) | — | ||||||||||||
Long-term software contract royalties | 286 | 203 | (150 | ) | 1,237 | 706 | |||||||||||||
Non-GAAP net revenue | $ | 52,889 | $ | 48,425 | $ | 51,971 | $ | 149,003 | $ | 149,256 | |||||||||
GAAP gross profit from continuing operations | $ | 16,873 | $ | 16,023 | $ | 16,962 | $ | 48,320 | $ | 48,250 | |||||||||
GAAP gross margin % from continuing operations | 32.1 | % | 33.2 | % | 32.5 | % | 32.7 | % | 32.5 | % | |||||||||
GAAP gross profit (loss) from discontinued operations | 18 | — | — | (102 | ) | — | |||||||||||||
GAAP gross profit from continuing and discontinued operations | $ | 16,891 | $ | 16,023 | $ | 16,962 | $ | 48,218 | $ | 48,250 | |||||||||
GAAP gross margin % from continuing and discontinued operations | 32.1 | % | 33.2 | % | 32.5 | % | 32.6 | % | 32.5 | % | |||||||||
Stock-based compensation | 75 | 95 | 98 | 254 | 257 | ||||||||||||||
Severance costs | 17 | 2 | — | 40 | 75 | ||||||||||||||
Power supply component failures | (6 | ) | — | (100 | ) | (782 | ) | (100 | ) | ||||||||||
AssuredUVS revenue | (18 | ) | — | — | (40 | ) | — | ||||||||||||
AssuredUVS expenses | — | — | — | 140 | — | ||||||||||||||
Long-term software contract royalties | 286 | 203 | (150 | ) | 1,237 | 706 | |||||||||||||
Long-term software contract costs | 88 | 117 | 50 | 433 | 290 | ||||||||||||||
Non-GAAP gross profit | $ | 17,333 | $ | 16,440 | $ | 16,860 | $ | 49,500 | $ | 49,478 | |||||||||
Non-GAAP gross margin % | 32.8 | % | 33.9 | % | 32.4 | % | 33.2 | % | 33.1 | % | |||||||||
GAAP sales and marketing expenses from continuing operations | $ | 3,512 | $ | 3,843 | $ | 3,522 | $ | 9,807 | $ | 10,659 | |||||||||
GAAP contribution margin from continuing operations | $ | 13,361 | $ | 12,180 | $ | 13,440 | $ | 38,513 | $ | 37,591 | |||||||||
GAAP contribution margin % from continuing operations | 25.4 | % | 25.3 | % | 25.8 | % | 26.1 | % | 25.3 | % | |||||||||
Stock-based compensation | (65 | ) | (99 | ) | (102 | ) | (213 | ) | (273 | ) | |||||||||
Severance costs | (4 | ) | — | — | (9 | ) | (42 | ) | |||||||||||
Non-GAAP sales and marketing expenses | $ | 3,443 | $ | 3,744 | $ | 3,420 | $ | 9,585 | $ | 10,344 | |||||||||
Non-GAAP contribution margin | $ | 13,890 | $ | 12,696 | $ | 13,440 | $ | 39,915 | $ | 39,134 | |||||||||
Non-GAAP contribution margin % | 26.3 | % | 26.2 | % | 25.9 | % | 26.8 | % | 26.2 | % | |||||||||
GAAP operating expenses from continuing operations | $ | 14,996 | $ | 16,034 | $ | 16,874 | $ | 44,816 | $ | 48,576 | |||||||||
GAAP operating expenses from discontinued operations | 36 | — | — | 350 | — | ||||||||||||||
GAAP operating expenses from continuing and discontinued operations | $ | 15,032 | $ | 16,034 | $ | 16,874 | $ | 45,166 | $ | 48,576 | |||||||||
Currency (loss) gain | (4 | ) | 28 | (116 | ) | (365 | ) | (15 | ) | ||||||||||
Stock-based compensation | (485 | ) | (959 | ) | (668 | ) | (1,663 | ) | (2,140 | ) | |||||||||
AssuredUVS expenses | (35 | ) | — | — | (383 | ) | — | ||||||||||||
Long-term software contract deferred costs | (41 | ) | — | — | 365 | — | |||||||||||||
Legal settlement | — | — | (1,000 | ) | — | (1,000 | ) | ||||||||||||
Legal fees related to power supply component failure | — | — | — | (2 | ) | — | |||||||||||||
Severance costs | (8 | ) | — | (11 | ) | (90 | ) | (95 | ) | ||||||||||
Non-GAAP operating expenses | $ | 14,459 | $ | 15,103 | $ | 15,079 | $ | 43,028 | $ | 45,326 | |||||||||
GAAP net income (loss) from continuing operations | $ | 1,775 | $ | (78 | ) | $ | 40 | $ | 3,304 | $ | (450 | ) | |||||||
GAAP net loss from discontinued operations | (18 | ) | — | — | (452 | ) | — | ||||||||||||
GAAP net income (loss) from continuing and discontinued operations | $ | 1,757 | $ | (78 | ) | $ | 40 | $ | 2,852 | $ | (450 | ) | |||||||
Currency loss (gain) | 4 | (28 | ) | 116 | 365 | 15 | |||||||||||||
Stock-based compensation | 560 | 1,054 | 766 | 1,917 | 2,397 | ||||||||||||||
Restructuring recoveries | 35 | — | — | 25 | — | ||||||||||||||
Power supply component failures | (6 | ) | — | (100 | ) | (780 | ) | (100 | ) | ||||||||||
AssuredUVS expenses | — | — | — | 498 | — | ||||||||||||||
AssuredUVS revenue | (18 | ) | — | — | (40 | ) | — | ||||||||||||
Other income | — | (17 | ) | — | — | (27 | ) | ||||||||||||
Long-term software contract royalties | 286 | 203 | (150 | ) | 1,237 | 706 | |||||||||||||
Long-term software contract costs | 88 | 117 | 50 | 433 | 290 | ||||||||||||||
Long-term software contract deferred costs | 41 | — | — | (365 | ) | — | |||||||||||||
Legal settlement | — | — | 1,000 | — | 1,000 | ||||||||||||||
Severance costs | 25 | 2 | 11 | 130 | 170 | ||||||||||||||
Non-GAAP net income | $ | 2,772 | $ | 1,253 | $ | 1,733 | $ | 6,272 | $ | 4,001 | |||||||||
Non-GAAP net income per share | |||||||||||||||||||
Basic and diluted | $ | 0.05 | $ | 0.02 | $ | 0.03 | $ | 0.11 | $ | 0.06 | |||||||||
Weighted average shares used to calculate net income per share: | |||||||||||||||||||
Basic | 58,736 | 60,159 | 60,396 | 58,376 | 60,021 | ||||||||||||||
Diluted | 60,062 | 63,806 | 63,755 | 58,879 | 63,767 | ||||||||||||||
Non-GAAP net income | $ | 2,772 | $ | 1,253 | $ | 1,733 | $ | 6,272 | $ | 4,001 | |||||||||
Interest expense less AssuredUVS | 1 | 4 | 4 | 16 | 26 | ||||||||||||||
Income tax expense | 100 | 74 | 46 | 183 | 121 | ||||||||||||||
Depreciation less AssuredUVS | 852 | 932 | 989 | 2,315 | 2,880 | ||||||||||||||
Non-GAAP EBITDA | $ | 3,725 | $ | 2,263 | $ | 2,772 | $ | 8,786 | $ | 7,028 |
DOT HILL SYSTEMS CORP. | |||||||
UNAUDITED RECONCILIATION OF CONSOLIDATED NON-GAAP MEASURES FOR NET REVENUE FOR TRAILING 12 MONTHS | |||||||
(In thousands) | |||||||
Q4 12 through Q3 13 | Q4 13 through Q3 14 | ||||||
Total GAAP net revenue from continuing operations | $ | 191,785 | $ | 207,349 | |||
GAAP revenue from discontinued operations | 168 | 10 | |||||
Total GAAP net revenue, from continuing and discontinued operations | $ | 191,953 | $ | 207,359 | |||
AssuredUVS revenue | (168 | ) | (10 | ) | |||
Long-term software contract royalties | 3,378 | 1,648 | |||||
Total non-GAAP net revenue | $ | 195,163 | $ | 208,997 | |||
Server OEM GAAP net revenue from continuing operations | $ | 127,267 | $ | 124,849 | |||
Long-term software contract royalties | 3,378 | 1,648 | |||||
Server OEM non-GAAP net revenue | $ | 130,645 | $ | 126,497 | |||
Vertical Markets GAAP net revenue from continuing operations | $ | 64,518 | $ | 82,500 | |||
GAAP revenue from discontinued operations | 168 | 10 | |||||
Vertical Markets GAAP net revenue, from continuing and discontinued operations | $ | 64,686 | $ | 82,510 | |||
AssuredUVS revenue | (168 | ) | (10 | ) | |||
Vertical Markets non-GAAP net revenue | $ | 64,518 | $ | 82,500 |
DOT HILL SYSTEMS CORP. | |||||||||||||||||||
UNAUDITED RECONCILIATION OF CONSOLIDATED NON-GAAP MEASURES FOR SERVER OEM SEGMENT | |||||||||||||||||||
(In thousands) | |||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||
September 30, 2013 | June 30, 2014 | September 30, 2014 | September 30, 2013 | September 30, 2014 | |||||||||||||||
Server OEM GAAP net revenue from continuing operations | $ | 35,126 | $ | 27,463 | $ | 31,643 | $ | 94,909 | $ | 84,960 | |||||||||
Long-term software contract royalties | 286 | 203 | (150 | ) | 1,237 | 706 | |||||||||||||
Server OEM non-GAAP net revenue | $ | 35,412 | $ | 27,666 | $ | 31,493 | $ | 96,146 | $ | 85,666 | |||||||||
Server OEM GAAP gross profit from continuing operations | $ | 8,963 | $ | 6,783 | $ | 8,120 | $ | 25,089 | $ | 20,507 | |||||||||
Server OEM GAAP gross margin % from continuing operations | 25.5 | % | 24.7 | % | 25.7 | % | 26.4 | % | 24.1 | % | |||||||||
Stock-based compensation | 55 | 59 | 67 | 185 | 168 | ||||||||||||||
Severance costs | 12 | 2 | — | 26 | 48 | ||||||||||||||
Power supply component failures | (6 | ) | — | (100 | ) | (782 | ) | (100 | ) | ||||||||||
Long-term software contract royalties | 286 | 203 | (150 | ) | 1,237 | 706 | |||||||||||||
Long-term software contract costs | 88 | 117 | 50 | 433 | 290 | ||||||||||||||
Server OEM non-GAAP gross profit | $ | 9,398 | $ | 7,164 | $ | 7,987 | $ | 26,188 | $ | 21,619 | |||||||||
Server OEM non-GAAP gross margin % | 26.5 | % | 25.9 | % | 25.4 | % | 27.2 | % | 25.2 | % | |||||||||
Server OEM GAAP sales and marketing expenses from continuing operations | $ | 493 | $ | 541 | $ | 516 | $ | 1,501 | $ | 1,539 | |||||||||
Server OEM GAAP contribution margin from continuing operations | $ | 8,470 | $ | 6,242 | $ | 7,604 | $ | 23,588 | $ | 18,968 | |||||||||
Server OEM GAAP contribution margin % from continuing operations | 24.1 | % | 22.7 | % | 24.0 | % | 24.9 | % | 22.3 | % | |||||||||
Stock-based compensation | (14 | ) | (21 | ) | (18 | ) | (45 | ) | (54 | ) | |||||||||
Severance costs | (1 | ) | — | — | (2 | ) | (9 | ) | |||||||||||
Server OEM non-GAAP sales and marketing expenses | $ | 478 | $ | 520 | $ | 498 | $ | 1,454 | $ | 1,476 | |||||||||
Server OEM non-GAAP contribution margin | $ | 8,920 | $ | 6,644 | $ | 7,489 | $ | 24,734 | $ | 20,143 | |||||||||
Server OEM non-GAAP contribution margin % | 25.2 | % | 24.0 | % | 23.8 | % | 25.7 | % | 23.5 | % | |||||||||
Server OEM GAAP operating income for continuing operations | $ | 8,470 | $ | 6,242 | $ | 7,604 | $ | 23,588 | $ | 18,968 | |||||||||
Stock-based compensation | 69 | 80 | 85 | 230 | 222 | ||||||||||||||
Severance costs | 13 | 2 | — | 28 | 57 | ||||||||||||||
Power supply component failures | (6 | ) | — | (100 | ) | (782 | ) | (100 | ) | ||||||||||
Long-term software contract royalties | 286 | 203 | (150 | ) | 1,237 | 706 | |||||||||||||
Long-term software contract costs | 88 | 117 | 50 | 433 | 290 | ||||||||||||||
Server OEM non-GAAP operating income | $ | 8,920 | $ | 6,644 | $ | 7,489 | $ | 24,734 | $ | 20,143 |
DOT HILL SYSTEMS CORP. | |||||||||||||||||||
UNAUDITED RECONCILIATION OF CONSOLIDATED NON-GAAP MEASURES FOR VERTICAL MARKETS SEGMENT | |||||||||||||||||||
(In thousands) | |||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||
September 30, 2013 | June 30, 2014 | September 30, 2014 | September 30, 2013 | September 30, 2014 | |||||||||||||||
Vertical Markets GAAP net revenue from continuing operations | $ | 17,477 | $ | 20,759 | $ | 20,478 | $ | 52,857 | $ | 63,590 | |||||||||
GAAP revenue from discontinued operations | 18 | — | — | 40 | — | ||||||||||||||
Vertical Markets GAAP net revenue from continuing and discontinued operations | $ | 17,495 | $ | 20,759 | $ | 20,478 | $ | 52,897 | $ | 63,590 | |||||||||
AssuredUVS revenue | (18 | ) | — | — | (40 | ) | — | ||||||||||||
Vertical Markets non-GAAP net revenue | $ | 17,477 | $ | 20,759 | $ | 20,478 | $ | 52,857 | $ | 63,590 | |||||||||
Vertical Markets GAAP gross profit from continuing operations | $ | 7,910 | $ | 9,240 | $ | 8,842 | $ | 23,231 | $ | 27,743 | |||||||||
Vertical Markets GAAP gross margin % from continuing operations | 45.3 | % | 44.5 | % | 43.2 | % | 44.0 | % | 43.6 | % | |||||||||
Vertical Markets GAAP gross profit (loss) from discontinued operations | 18 | — | — | (102 | ) | — | |||||||||||||
Vertical Markets GAAP gross profit from continuing and discontinued operations | $ | 7,928 | $ | 9,240 | $ | 8,842 | $ | 23,129 | $ | 27,743 | |||||||||
Vertical Markets GAAP gross margin % from continuing and discontinued operations | 45.3 | % | 44.5 | % | 43.2 | % | 43.7 | % | 43.6 | % | |||||||||
Stock-based compensation | 20 | 36 | 31 | 69 | 90 | ||||||||||||||
Severance costs | 5 | — | — | 14 | 26 | ||||||||||||||
AssuredUVS revenue | (18 | ) | — | — | (40 | ) | — | ||||||||||||
AssuredUVS expenses | — | — | — | 140 | — | ||||||||||||||
Vertical Markets non-GAAP gross profit | $ | 7,935 | $ | 9,276 | $ | 8,873 | $ | 23,312 | $ | 27,859 | |||||||||
Vertical Markets non-GAAP gross margin % | 45.4 | % | 44.7 | % | 43.3 | % | 44.1 | % | 43.8 | % | |||||||||
Vertical Markets GAAP sales and marketing expenses from continuing operations | $ | 2,377 | $ | 2,478 | $ | 2,593 | $ | 6,453 | $ | 7,325 | |||||||||
Vertical Markets GAAP contribution margin from continuing operations | $ | 5,533 | $ | 6,762 | $ | 6,249 | $ | 16,778 | $ | 20,418 | |||||||||
Vertical Markets GAAP contribution margin % from continuing operations | 31.7 | % | 32.6 | % | 30.5 | % | 31.7 | % | 32.1 | % | |||||||||
Stock-based compensation | (29 | ) | (45 | ) | (51 | ) | (97 | ) | (129 | ) | |||||||||
Severance costs | (2 | ) | — | — | (4 | ) | (19 | ) | |||||||||||
Vertical Markets non-GAAP sales and marketing expenses | $ | 2,346 | $ | 2,433 | $ | 2,542 | $ | 6,352 | $ | 7,177 | |||||||||
Vertical Markets non-GAAP contribution margin | $ | 5,589 | $ | 6,843 | $ | 6,331 | $ | 16,960 | $ | 20,682 | |||||||||
Vertical Markets non-GAAP contribution margin % | 32.0 | % | 33.0 | % | 30.9 | % | 32.1 | % | 32.5 | % | |||||||||
Vertical Markets GAAP operating income for continuing operations | $ | 5,533 | $ | 6,762 | $ | 6,249 | $ | 16,778 | $ | 20,418 | |||||||||
Vertical Markets GAAP operating loss for discontinued operations | 18 | — | — | (102 | ) | — | |||||||||||||
Vertical Markets GAAP operating income for continuing and discontinued operations | $ | 5,551 | $ | 6,762 | $ | 6,249 | $ | 16,676 | $ | 20,418 | |||||||||
Stock-based compensation | 49 | 81 | 82 | 166 | 219 | ||||||||||||||
Severance costs | 7 | — | — | 18 | 45 | ||||||||||||||
AssuredUVS revenue | (18 | ) | — | — | (40 | ) | — | ||||||||||||
AssuredUVS expenses | — | — | — | 140 | — | ||||||||||||||
Vertical Markets non-GAAP operating income | $ | 5,589 | $ | 6,843 | $ | 6,331 | $ | 16,960 | $ | 20,682 |
DOT HILL SYSTEMS CORP. | |||||||||||||||||||
UNAUDITED RECONCILIATION OF CONSOLIDATED NON-GAAP MEASURES FOR CORPORATE SEGMENT | |||||||||||||||||||
(In thousands) | |||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||
September 30, 2013 | June 30, 2014 | September 30, 2014 | September 30, 2013 | September 30, 2014 | |||||||||||||||
Corporate GAAP sales and marketing expenses from continuing operations | $ | 642 | $ | 824 | $ | 413 | $ | 1,853 | $ | 1,795 | |||||||||
Corporate GAAP contribution margin from continuing operations | $ | (642 | ) | $ | (824 | ) | $ | (413 | ) | $ | (1,853 | ) | $ | (1,795 | ) | ||||
Stock-based compensation | (22 | ) | (33 | ) | (33 | ) | (71 | ) | (90 | ) | |||||||||
Severance costs | (1 | ) | — | — | (3 | ) | (14 | ) | |||||||||||
Corporate non-GAAP sales and marketing expenses | $ | 619 | $ | 791 | $ | 380 | $ | 1,779 | $ | 1,691 | |||||||||
Corporate non-GAAP contribution margin | $ | (619 | ) | $ | (791 | ) | $ | (380 | ) | $ | (1,779 | ) | $ | (1,691 | ) | ||||
Corporate GAAP research and development expenses from continuing operations | $ | 8,972 | $ | 9,340 | $ | 9,516 | $ | 26,593 | $ | 28,332 | |||||||||
Stock-based compensation | (340 | ) | (347 | ) | (341 | ) | (917 | ) | (949 | ) | |||||||||
Long-term software contract deferred costs | (41 | ) | — | — | 365 | — | |||||||||||||
Severance costs | — | — | (11 | ) | (77 | ) | (51 | ) | |||||||||||
Corporate non-GAAP research and development expenses | $ | 8,591 | $ | 8,993 | $ | 9,164 | $ | 25,964 | $ | 27,332 | |||||||||
Corporate GAAP general & administrative expenses from continuing operations | $ | 2,512 | $ | 2,851 | $ | 3,836 | $ | 8,416 | $ | 9,585 | |||||||||
Corporate GAAP general & administrative expenses from discontinued operations | 36 | — | — | 359 | — | ||||||||||||||
Corporate GAAP general & administrative expenses from continuing and discontinued operations | $ | 2,548 | $ | 2,851 | $ | 3,836 | $ | 8,775 | $ | 9,585 | |||||||||
Currency loss (gain) | (4 | ) | 28 | (116 | ) | (365 | ) | (15 | ) | ||||||||||
Stock-based compensation | (80 | ) | (513 | ) | (225 | ) | (533 | ) | (918 | ) | |||||||||
AssuredUVS expenses | (35 | ) | — | — | (394 | ) | — | ||||||||||||
Legal settlement | — | — | (1,000 | ) | — | (1,000 | ) | ||||||||||||
Legal fees related to power supply component failure | — | — | — | (2 | ) | — | |||||||||||||
Severance costs | (4 | ) | — | — | (4 | ) | (2 | ) | |||||||||||
Corporate non-GAAP general & administrative expenses | $ | 2,425 | $ | 2,366 | $ | 2,495 | $ | 7,477 | $ | 7,650 | |||||||||
Corporate GAAP operating loss from continuing operations | $ | (12,126 | ) | $ | (13,015 | ) | $ | (13,765 | ) | $ | (36,862 | ) | $ | (39,712 | ) | ||||
Corporate GAAP operating loss from discontinued operations | (36 | ) | — | — | (359 | ) | — | ||||||||||||
Corporate GAAP operating loss from continuing and discontinued operations | $ | (12,162 | ) | $ | (13,015 | ) | $ | (13,765 | ) | $ | (37,221 | ) | $ | (39,712 | ) | ||||
Currency loss (gain) | 4 | (28 | ) | 116 | 365 | 15 | |||||||||||||
Stock-based compensation | 442 | 893 | 599 | 1,521 | 1,957 | ||||||||||||||
AssuredUVS expenses | 35 | — | — | 394 | — | ||||||||||||||
Long-term software contract deferred costs | 41 | — | — | (365 | ) | — | |||||||||||||
Legal fees related to power supply component failure | — | — | — | 2 | — | ||||||||||||||
Legal settlement | — | — | 1,000 | — | 1,000 | ||||||||||||||
Severance costs | 5 | — | 11 | 84 | 67 | ||||||||||||||
Corporate non-GAAP operating loss | $ | (11,635 | ) | $ | (12,150 | ) | $ | (12,039 | ) | $ | (35,220 | ) | $ | (36,673 | ) |
DOT HILL SYSTEMS CORP. | |||||||||||||||||||
UNAUDITED RECONCILIATION OF CONSOLIDATED NON-GAAP MEASURES | |||||||||||||||||||
(In thousands, except per share amounts) | |||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||
September 30, 2013 | June 30, 2014 | September 30, 2014 | September 30, 2013 | September 30, 2014 | |||||||||||||||
GAAP income (loss) per share from continuing operations | $ | 0.03 | $ | (0.00 | ) | $ | 0.00 | $ | 0.06 | $ | (0.01 | ) | |||||||
GAAP loss per share from discontinued operations | (0.00 | ) | — | — | (0.01 | ) | — | ||||||||||||
GAAP income (loss) per share from continuing and discontinued operations* | $ | 0.03 | $ | (0.00 | ) | $ | 0.00 | $ | 0.05 | $ | (0.01 | ) | |||||||
Currency loss | — | (0.00 | ) | 0.00 | 0.01 | 0.00 | |||||||||||||
Stock-based compensation | 0.01 | 0.02 | 0.01 | 0.03 | 0.04 | ||||||||||||||
Power supply component failures | — | — | (0.00 | ) | (0.01 | ) | 0.00 | ||||||||||||
AssuredUVS expenses | — | — | — | 0.01 | — | ||||||||||||||
Long-term software contract royalties | — | 0.00 | (0.00 | ) | 0.02 | 0.01 | |||||||||||||
Long-term software contract costs | — | 0.00 | 0.00 | 0.01 | 0.00 | ||||||||||||||
Long-term software contract deferred costs | — | — | — | (0.01 | ) | — | |||||||||||||
Legal settlement | — | — | 0.02 | — | 0.02 | ||||||||||||||
Other adjustments | 0.01 | 0.00 | — | — | (0.01 | ) | |||||||||||||
Non-GAAP income per share* | $ | 0.05 | $ | 0.02 | $ | 0.03 | $ | 0.11 | $ | 0.06 | |||||||||
Weighted average shares used to calculate earnings per share: | |||||||||||||||||||
Basic | 58,736 | 60,159 | 60,396 | 58,376 | 60,021 | ||||||||||||||
Diluted | 60,062 | 63,806 | 63,755 | 58,879 | 63,767 | ||||||||||||||
* Per share data may not always add to the total for the period because each figure is independently calculated. |