Delaware
(State or other jurisdiction of
incorporation)
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001-34006
(Commission
File Number)
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48-1129619
(I.R.S. Employer
Identification No.)
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99.1
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Press Release dated March 31, 2016
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CARTESIAN, INC.
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By:
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/s/ Peter H. Woodward
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Peter H. Woodward
Chief Executive Officer
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Exhibit Number
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Description
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99.1
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Press Release dated March 31, 2016
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●
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Completed management changes, including promotion of Bill Hill to President and appointment of John Ferrara as CFO.
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●
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Deployed new managed solution, Incentive Management System (IMS) at a Tier 1 multi-system operator.
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Farncombe subsidiary appointed by AACS LA as the first Authorized Robustness Consultant (ARC), responsible for ensuring the security of next-generation Ultra HD Blu-rayTM players.
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Accepted as a supplier for the UK’s government procurement framework, G-Cloud 7, which allows the company to bid for government contracts related to cloud-based consulting services.
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Non-GAAP revenues (on a constant currency basis) increased 20% to $22.5 million, while GAAP revenues were up 19% to $22.2 million (see reconciliation to GAAP, below).
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Inventory impairment of $2.1 million recorded during Q4 2015, reducing GAAP gross margin. Non-GAAP gross margin consistent quarter-over-quarter.
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●
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Ended the quarter with $6.9 million in cash and $9.4 million in net working capital
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CARTESIAN, INC.
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
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(In thousands, except per share data)
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(unaudited)
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Thirteen Weeks Ended
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Fourteen Weeks Ended
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Fifty-two Weeks Ended
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Fifty-three Weeks Ended
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|||||||||||||
January 2,
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January 3,
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January 2,
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January 3,
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|||||||||||||
2016
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2015
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2016
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2015
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|||||||||||||
Revenues
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$ | 22,200 | $ | 18,686 | $ | 78,344 | $ | 71,675 | ||||||||
Cost of services
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14,258 | 11,870 | 50,252 | 45,088 | ||||||||||||
Inventory impairment
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2,075 | - | 2,375 | - | ||||||||||||
Gross profit
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5,867 | 6,816 | 25,717 | 26,587 | ||||||||||||
Selling, general and administrative expenses (includes non-cash share-based compensation expense of $(139) and $334 for the thirteen weeks ended January 2, 2016 and the fourteen weeks ended January 3, 2015, respectively and $372 and $1,055 for the fiscal years ended January 2, 2016 and January 3, 2015, respectively)
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8,359 | 7,094 | 31,923 | 27,468 | ||||||||||||
Loss from operations
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(2,492 | ) | (278 | ) | (6,206 | ) | (881 | ) | ||||||||
Other expense
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||||||||||||||||
Interest expense, net
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(61 | ) | (63 | ) | (228 | ) | (200 | ) | ||||||||
Discount on note payable and transaction costs
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- | - | - | (1,610 | ) | |||||||||||
Change in fair value of warrants and derivative liabilities
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(4 | ) | 178 | (615 | ) | 159 | ||||||||||
Incentive warrants expense
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(6 | ) | - | (63 | ) | - | ||||||||||
Other income
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7 | - | 7 | - | ||||||||||||
Total other expense
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(64 | ) | 115 | (899 | ) | (1,651 | ) | |||||||||
Loss before income taxes
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(2,556 | ) | (163 | ) | (7,105 | ) | (2,532 | ) | ||||||||
Income tax (provision) benefit
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(214 | ) | (191 | ) | (586 | ) | 1,121 | |||||||||
Net loss
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$ | (2,770 | ) | $ | (354 | ) | $ | (7,691 | ) | $ | (1,411 | ) | ||||
Net loss per basic and diluted common share
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$ | (0.32 | ) | $ | (0.04 | ) | $ | (0.91 | ) | $ | (0.18 | ) | ||||
Weighted average shares used in calculation of net loss per basic and diluted common share
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8,713 | 8,016 | 8,413 | 7,800 |
CARTESIAN, INC.
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CONDENSED CONSOLIDATED BALANCE SHEETS
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(In thousands)
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(unaudited)
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January 2,
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January 3,
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|||||||
2016
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2015
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|||||||
ASSETS
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CURRENT ASSETS:
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Cash and cash equivalents
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$ | 6,879 | $ | 12,999 | ||||
Accounts receivable, net
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16,556 | 13,527 | ||||||
Inventory, net
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625 | 3,000 | ||||||
Prepaid and other current assets
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1,754 | 1,747 | ||||||
Total current assets
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25,814 | 31,273 | ||||||
NONCURRENT ASSETS:
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Property and equipment, net
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2,511 | 1,292 | ||||||
Goodwill
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11,071 | 8,015 | ||||||
Intangible assets, net
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996 | - | ||||||
Deferred income tax assets
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509 | 1,085 | ||||||
Other noncurrent assets
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458 | 611 | ||||||
Total Assets
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$ | 41,359 | $ | 42,276 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
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CURRENT LIABILITIES:
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Trade accounts payable
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$ | 3,253 | $ | 1,806 | ||||
Current borrowings
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3,269 | 3,269 | ||||||
Liabilities for derivatives
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952 | 337 | ||||||
Accrued payroll, bonuses and related expenses
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5,125 | 3,899 | ||||||
Accrued severance liability and related costs
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- | 1,694 | ||||||
Deferred revenue
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1,551 | 1,665 | ||||||
Accrued acquisition consideration
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327 | - | ||||||
Other accrued liabilities
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1,924 | 986 | ||||||
Total current liabilities
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16,401 | 13,656 | ||||||
NONCURRENT LIABILITIES:
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Deferred income tax liabilities
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780 | 722 | ||||||
Deferred revenue
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407 | 330 | ||||||
Contingent consideration liability
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2,176 | - | ||||||
Other noncurrent liabilities
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952 | 151 | ||||||
Total noncurrent liabilities
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4,315 | 1,203 | ||||||
Total stockholders’ equity
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20,643 | 27,417 | ||||||
Total Liabilities and Stockholders’ Equity
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$ | 41,359 | $ | 42,276 |
CARTESIAN, INC.
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RECONCILIATION OF GAAP NET LOSS TO NON-GAAP ADJUSTED NET (LOSS) INCOME
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AND GAAP LOSS FROM OPERATIONS TO NON-GAAP ADJUSTED (LOSS) INCOME FROM OPERATIONS
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(unaudited)
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(in thousands, except per share data)
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Thirteen Weeks Ended
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Fourteen Weeks Ended
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Fifty-two Weeks Ended
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Fifty-three Weeks Ended
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January 2,
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January 3,
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January 2,
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January 3,
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|||||||||||||
2016
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2015
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2016
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2015
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Reconciliation of GAAP loss from operations to non-GAAP adjusted income (loss) from operations:
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GAAP loss from operations
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$ | (2,492 | ) | $ | (278 | ) | $ | (6,206 | ) | $ | (881 | ) | ||||
Depreciation
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235 | 140 | 952 | 628 | ||||||||||||
Amortization of intangible assets
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125 | - | 208 | - | ||||||||||||
Accrued executive severance and related costs
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- | 573 | 821 | 1,943 | ||||||||||||
Acquisition-related expenses
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41 | - | 697 | - | ||||||||||||
Non-cash share based compensation expense
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(139 | ) | 334 | 372 | 1,057 | |||||||||||
Inventory impairment
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2,075 | - | 2,375 | - | ||||||||||||
Lease expense for discontinuation of office space
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78 | - | 334 | - | ||||||||||||
Fair value adjustment to contingent consideration
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277 | - | 255 | - | ||||||||||||
Foreign currency exchange loss on note payable
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75 | 147 | 171 | 152 | ||||||||||||
Adjustments to GAAP loss from operations
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2,767 | 1,194 | 6,185 | 3,780 | ||||||||||||
Non-GAAP adjusted income (loss) from operations
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$ | 275 | $ | 916 | $ | (21 | ) | $ | 2,899 | |||||||
Reconciliation of GAAP net loss to non-GAAP adjusted net (loss) income:
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GAAP net loss
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$ | (2,770 | ) | $ | (354 | ) | $ | (7,691 | ) | $ | (1,411 | ) | ||||
Depreciation
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235 | 140 | 952 | 628 | ||||||||||||
Amortization of intangible assets
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125 | - | 208 | - | ||||||||||||
Accrued executive severance and related costs
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- | 573 | 821 | 1,943 | ||||||||||||
Acquisition-related expenses
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41 | - | 697 | - | ||||||||||||
Non-cash share based compensation expense
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(139 | ) | 334 | 372 | 1,057 | |||||||||||
Inventory impairment
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2,075 | - | 2,375 | - | ||||||||||||
Lease expense for discontinuation of office space
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78 | - | 334 | - | ||||||||||||
Fair value adjustment to contingent consideration
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277 | - | 255 | - | ||||||||||||
Discount on note payable and transaction costs
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- | - | - | 1,610 | ||||||||||||
Change in fair value of derivative liabilities
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4 | (178 | ) | 615 | (159 | ) | ||||||||||
Foreign currency exchange loss on note payable
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75 | 147 | 171 | 152 | ||||||||||||
Incentive warrants expense
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6 | - | 63 | - | ||||||||||||
Tax effect of applicable non-GAAP adjustments (1)
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(18 | ) | (7 | ) | (42 | ) | 13 | |||||||||
Adjustments to GAAP net loss
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2,759 | 1,009 | 6,821 | 5,244 | ||||||||||||
Non-GAAP adjusted net (loss) income
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$ | (11 | ) | $ | 655 | $ | (870 | ) | $ | 3,833 | ||||||
Reconciliation of GAAP net loss per diluted common share to non-GAAP adjusted net (loss) income per diluted common share:
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GAAP net loss per diluted common share (2)
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$ | (0.32 | ) | $ | (0.04 | ) | $ | (0.91 | ) | $ | (0.18 | ) | ||||
Depreciation
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0.03 | 0.01 | 0.11 | 0.08 | ||||||||||||
Amortization of intangible assets
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0.01 | - | 0.03 | - | ||||||||||||
Accrued executive severance and related costs
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- | 0.07 | 0.10 | 0.25 | ||||||||||||
Acquisition-related expenses
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0.01 | - | 0.08 | - | ||||||||||||
Non-cash share based compensation expense
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(0.02 | ) | 0.04 | 0.04 | 0.13 | |||||||||||
Inventory impairment
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0.24 | - | 0.28 | - | ||||||||||||
Lease expense for discontinuation of office space
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0.01 | - | 0.04 | - | ||||||||||||
Fair value adjustment to contingent consideration
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0.03 | - | 0.03 | - | ||||||||||||
Discount on note payable and transaction costs
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- | - | - | 0.20 | ||||||||||||
Change in fair value of derivative liabilities
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0.00 | (0.02 | ) | 0.07 | (0.02 | ) | ||||||||||
Foreign currency exchange loss on note payable
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0.01 | 0.02 | 0.02 | 0.02 | ||||||||||||
Incentive warrants expense
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- | - | 0.01 | - | ||||||||||||
Tax effect of applicable non-GAAP adjustments (1)
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(0.00 | ) | - | - | - | |||||||||||
Adjustments to GAAP net loss per diluted common share
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0.32 | 0.12 | 0.81 | 0.66 | ||||||||||||
Non-GAAP adjusted net (loss) income per diluted common share
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$ | (0.00 | ) | $ | 0.08 | $ | (0.10 | ) | $ | 0.48 | ||||||
Weighted average shares used in calculation of Non-GAAP adjusted net (loss) income per diluted common share (2)
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8,713 | 8,292 | 8,413 | 8,019 | ||||||||||||
(1) The Company calculated the tax effect of non-GAAP adjustments by applying an applicable estimated jurisdictional tax rate to each specific non-GAAP item after consideration of the Company's valuation allowance.
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(2) The Company uses weighted average diluted common shares including the dilutive effect of stock options, non-vested shares and warrants in the calculation of GAAP net loss per diluted common share in this reconciliation in order to reconcile to Non-GAAP adjusted net income per diluted common share for the fourteen weeks and fifty-three weeks ended January 3, 2015.
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Thirteen | Fourteen | Fifty-two | Fifty-three | |||||||||||||||||||||
Weeks Ended
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Weeks Ended
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Weeks Ended
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Weeks Ended
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January 2, | January 3, |
Year-Over-Year
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January 2,
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January 3,
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Year-Over-Year
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2016
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2015
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Growth
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2016
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2015
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Growth
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Non-GAAP Constant Currency Revenues Reconciliation (1),(2)
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GAAP revenues, as reported
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$ | 22,200 | $ | 18,686 | 18.8 | % | $ | 78,344 | $ | 71,675 | 9.3 | % | ||||||||||||
Foreign currency exchange impact on 2015 revenues using 2014 average rates (2)
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282 | 3,054 | ||||||||||||||||||||||
Non-GAAP revenues, at constant currency
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$ | 22,482 | $ | 18,686 | 20.3 | % | $ | 81,398 | $ | 71,675 | 13.6 | % |
(1) Non-GAAP revenues on a constant currency basis are calculated by applying the average foreign exchange rates for the fourteen and fifty-three weeks ended January 3, 2015 to foreign-denominated revenues in the comparable current year periods. The difference between non-GAAP revenues and revenues calculated in accordance with GAAP is shown as "foreign currency exchange impact" in the table above. Non-GAAP constant currency revenue growth (expressed as a percentage) is calculated by determining the increase in non-GAAP constant currency revenues in fiscal 2015 compared to GAAP revenues for the prior year.
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(2) The calculation of the foreign currency exchange impact on our fiscal 2015 revenues is exclusive of the impact of the Farncombe acquisition on July 22, 2015. Revenues for the Farncombe entities are included in our GAAP revenues, as reported from the date of acquisition through January 2, 2016.
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