Delaware | 000-50350 | 77-0419172 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification Number) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Exhibit Number | Description | |
99.1 | Press Release, dated February 6, 2014 |
• | Fourth quarter 2013 net revenue of $356.6 million, as compared to $310.4 million in the comparable prior year quarter, increase of 14.9% year-over-year |
• | Fourth quarter 2013 non-GAAP net income of $22.6 million, as compared to $21.5 million in the comparable prior year quarter, increase of 5.3% year-over-year |
• | Fourth quarter 2013 non-GAAP diluted earnings per share of $0.59, as compared to $0.55 in the comparable prior year quarter, increase of 7.3% year-over-year |
• | 2013 net revenue was $1.37 billion, as compared to $1.27 billion in 2012, increase of 7.7% year-over-year |
• | 2013 non-GAAP net income of $89.3 million, as compared to $99.4 million in 2012, decrease of 10.2% year-over-year |
• | 2013 non-GAAP diluted earnings per share of $2.29, as compared to $2.57 in 2012, decrease of 10.9% year-over-year |
• | Company expects first quarter 2014 net revenue to be in the range of $335 million to $350 million, with non-GAAP operating margin in the range of 9% to 10% |
NETGEAR, INC. |
CONDENSED CONSOLIDATED BALANCE SHEETS |
(In thousands) |
(Unaudited) |
December 31, 2013 | December 31, 2012 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 143,009 | $ | 149,032 | |||
Short-term investments | 105,145 | 227,845 | |||||
Accounts receivable, net | 266,484 | 256,014 | |||||
Inventories | 224,456 | 174,903 | |||||
Deferred income taxes | 27,239 | 22,691 | |||||
Prepaid expenses and other current assets | 33,778 | 33,724 | |||||
Total current assets | 800,111 | 864,209 | |||||
Property and equipment, net | 27,194 | 19,025 | |||||
Intangibles, net | 84,118 | 27,621 | |||||
Goodwill | 155,916 | 100,880 | |||||
Other non-current assets | 26,591 | 22,834 | |||||
Total assets | $ | 1,093,930 | $ | 1,034,569 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 114,531 | $ | 87,310 | |||
Accrued employee compensation | 16,551 | 18,338 | |||||
Other accrued liabilities | 143,218 | 126,255 | |||||
Deferred revenue | 24,496 | 27,645 | |||||
Income taxes payable | 1,287 | 1,382 | |||||
Total current liabilities | 300,083 | 260,930 | |||||
Non-current income taxes payable | 13,804 | 13,735 | |||||
Other non-current liabilities | 6,260 | 5,293 | |||||
Total liabilities | 320,147 | 279,958 | |||||
Stockholders' equity: | |||||||
Common stock | 37 | 38 | |||||
Additional paid-in capital | 421,901 | 394,427 | |||||
Cumulative other comprehensive income | 69 | 4 | |||||
Retained earnings | 351,776 | 360,142 | |||||
Total stockholders' equity | 773,783 | 754,611 | |||||
Total liabilities and stockholders' equity | $ | 1,093,930 | $ | 1,034,569 |
NETGEAR, INC. |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
(In thousands, except per share data) |
(Unaudited) |
Three Months Ended | Twelve Months Ended | ||||||||||||||||||
December 31, 2013 | September 29, 2013 | December 31, 2012 | December 31, 2013 | December 31, 2012 | |||||||||||||||
Net revenue | $ | 356,620 | $ | 361,895 | $ | 310,436 | $ | 1,369,633 | $ | 1,271,921 | |||||||||
Cost of revenue | 255,831 | 260,236 | 219,058 | 976,018 | 888,368 | ||||||||||||||
Gross profit | 100,789 | 101,659 | 91,378 | 393,615 | 383,553 | ||||||||||||||
Operating expenses: | |||||||||||||||||||
Research and development | 22,529 | 23,320 | 14,789 | 85,168 | 61,066 | ||||||||||||||
Sales and marketing | 37,544 | 39,465 | 35,519 | 153,804 | 149,766 | ||||||||||||||
General and administrative | 12,339 | 11,930 | 11,507 | 48,915 | 45,027 | ||||||||||||||
Restructuring and other charges | 3,378 | 400 | 1,190 | 5,335 | 1,190 | ||||||||||||||
Litigation reserves, net | 1,446 | 305 | (30 | ) | 5,354 | 390 | |||||||||||||
Impairment charges | — | 2,000 | — | 2,000 | — | ||||||||||||||
Total operating expenses | 77,236 | 77,420 | 62,975 | 300,576 | 257,439 | ||||||||||||||
Income from operations | 23,553 | 24,239 | 28,403 | 93,039 | 126,114 | ||||||||||||||
Interest income | 85 | 71 | 154 | 400 | 498 | ||||||||||||||
Other (expense) income, net | (494 | ) | 511 | (153 | ) | (457 | ) | 2,670 | |||||||||||
Income before income taxes | 23,144 | 24,821 | 28,404 | 92,982 | 129,282 | ||||||||||||||
Provision for income taxes | 11,712 | 10,364 | 12,325 | 37,765 | 42,743 | ||||||||||||||
Net income | $ | 11,432 | $ | 14,457 | $ | 16,079 | $ | 55,217 | $ | 86,539 | |||||||||
Net income per share: | |||||||||||||||||||
Basic | $ | 0.30 | $ | 0.37 | $ | 0.42 | $ | 1.44 | $ | 2.27 | |||||||||
Diluted | $ | 0.30 | $ | 0.37 | $ | 0.41 | $ | 1.42 | $ | 2.23 | |||||||||
Weighted average shares outstanding used to compute net income per share: | |||||||||||||||||||
Basic | 37,845 | 38,700 | 38,293 | 38,379 | 38,057 | ||||||||||||||
Diluted | 38,408 | 39,198 | 38,924 | 38,948 | 38,747 | ||||||||||||||
NETGEAR, INC. |
RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES |
(In thousands, except per share data) |
(Unaudited) |
STATEMENT OF OPERATIONS DATA: |
Three Months Ended | Twelve Months Ended | ||||||||||||||||||
December 31, 2013 | September 29, 2013 | December 31, 2012 | December 31, 2013 | December 31, 2012 | |||||||||||||||
GAAP gross profit | $ | 100,789 | $ | 101,659 | $ | 91,378 | $ | 393,615 | $ | 383,553 | |||||||||
Amortization of intangible assets | 2,664 | 2,414 | 1,446 | 8,803 | 4,763 | ||||||||||||||
Stock-based compensation expense | 503 | 479 | 326 | 1,577 | 1,347 | ||||||||||||||
Impact to cost of sales from acquisition accounting adjustments to inventory | — | — | — | 568 | — | ||||||||||||||
Non-GAAP gross profit | $ | 103,956 | $ | 104,552 | $ | 93,150 | $ | 404,563 | $ | 389,663 | |||||||||
Non-GAAP gross margin | 29.2 | % | 28.9 | % | 30.0 | % | 29.5 | % | 30.6 | % | |||||||||
GAAP research and development | $ | 22,529 | $ | 23,320 | $ | 14,789 | $ | 85,168 | $ | 61,066 | |||||||||
Stock-based compensation expense | (1,089 | ) | (1,047 | ) | (721 | ) | (3,943 | ) | (2,787 | ) | |||||||||
Non-GAAP research and development | $ | 21,440 | $ | 22,273 | $ | 14,068 | $ | 81,225 | $ | 58,279 | |||||||||
GAAP sales and marketing | $ | 37,544 | $ | 39,465 | $ | 35,519 | $ | 153,804 | $ | 149,766 | |||||||||
Amortization of intangible assets | (1,771 | ) | (2,025 | ) | — | (6,414 | ) | — | |||||||||||
Stock-based compensation expense | (1,508 | ) | (1,331 | ) | (1,128 | ) | (5,379 | ) | (4,751 | ) | |||||||||
Non-GAAP sales and marketing | $ | 34,265 | $ | 36,109 | $ | 34,391 | $ | 142,011 | $ | 145,015 | |||||||||
GAAP general and administrative | $ | 12,339 | $ | 11,930 | $ | 11,507 | $ | 48,915 | $ | 45,027 | |||||||||
Stock-based compensation expense | (1,870 | ) | (1,654 | ) | (1,391 | ) | (6,563 | ) | (5,487 | ) | |||||||||
Acquisition related expense | (16 | ) | — | (833 | ) | (940 | ) | (833 | ) | ||||||||||
Non-GAAP general and administrative | $ | 10,453 | $ | 10,276 | $ | 9,283 | $ | 41,412 | $ | 38,707 | |||||||||
GAAP total operating expenses | $ | 77,236 | $ | 77,420 | $ | 62,975 | $ | 300,576 | $ | 257,439 | |||||||||
Amortization of intangible assets | (1,771 | ) | (2,025 | ) | — | (6,414 | ) | — | |||||||||||
Stock-based compensation expense | (4,467 | ) | (4,032 | ) | (3,240 | ) | (15,885 | ) | (13,025 | ) | |||||||||
Restructuring and other charges | (3,378 | ) | (400 | ) | (1,190 | ) | (5,335 | ) | (1,190 | ) | |||||||||
Acquisition related expense | (16 | ) | — | (833 | ) | (940 | ) | (833 | ) | ||||||||||
Litigation reserves, net | (1,446 | ) | (305 | ) | 30 | (5,354 | ) | (390 | ) | ||||||||||
Impairment charges | — | (2,000 | ) | — | (2,000 | ) | — | ||||||||||||
Non-GAAP total operating expenses | $ | 66,158 | $ | 68,658 | $ | 57,742 | $ | 264,648 | $ | 242,001 |
NETGEAR, INC. |
RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES (CONTINUED) |
(In thousands, except per share data) |
(Unaudited) |
STATEMENT OF OPERATIONS DATA (CONTINUED): |
Three Months Ended | Twelve Months Ended | ||||||||||||||||||
December 31, 2013 | September 29, 2013 | December 31, 2012 | December 31, 2013 | December 31, 2012 | |||||||||||||||
GAAP operating income | $ | 23,553 | $ | 24,239 | $ | 28,403 | $ | 93,039 | $ | 126,114 | |||||||||
Amortization of intangible assets | 4,435 | 4,439 | 1,446 | 15,217 | 4,763 | ||||||||||||||
Stock-based compensation expense | 4,970 | 4,511 | 3,566 | 17,462 | 14,372 | ||||||||||||||
Restructuring and other charges | 3,378 | 400 | 1,190 | 5,335 | 1,190 | ||||||||||||||
Acquisition-related expense | 16 | — | 833 | 940 | 833 | ||||||||||||||
Impact to cost of sales from acquisition accounting adjustments to inventory | — | — | — | 568 | — | ||||||||||||||
Litigation reserves, net | 1,446 | 305 | (30 | ) | 5,354 | 390 | |||||||||||||
Impairment charges | — | 2,000 | — | 2,000 | — | ||||||||||||||
Non-GAAP operating income | $ | 37,798 | $ | 35,894 | $ | 35,408 | $ | 139,915 | $ | 147,662 | |||||||||
Non-GAAP operating margin | 10.6 | % | 9.9 | % | 11.4 | % | 10.2 | % | 11.6 | % | |||||||||
GAAP other (expense) income, net | $ | (494 | ) | $ | 511 | $ | (153 | ) | $ | (457 | ) | $ | 2,670 | ||||||
Gain on sale of cost method investment | — | — | — | — | (3,126 | ) | |||||||||||||
Non-GAAP other (expense) income, net | $ | (494 | ) | $ | 511 | $ | (153 | ) | $ | (457 | ) | $ | (456 | ) | |||||
GAAP net income | $ | 11,432 | $ | 14,457 | $ | 16,079 | $ | 55,217 | $ | 86,539 | |||||||||
Amortization of intangible assets | 4,435 | 4,439 | 1,446 | 15,217 | 4,763 | ||||||||||||||
Stock-based compensation expense | 4,970 | 4,511 | 3,566 | 17,462 | 14,372 | ||||||||||||||
Restructuring and other charges | 3,378 | 400 | 1,190 | 5,335 | 1,190 | ||||||||||||||
Acquisition-related expense | 16 | — | 833 | 940 | 833 | ||||||||||||||
Impact to cost of sales from acquisition accounting adjustments to inventory | — | — | — | 568 | — | ||||||||||||||
Litigation reserves, net | 1,446 | 305 | (30 | ) | 5,354 | 390 | |||||||||||||
Impairment charges | — | 2,000 | — | 2,000 | — | ||||||||||||||
Gain on sale of cost method investment | — | — | — | — | (3,126 | ) | |||||||||||||
Tax effect | (3,075 | ) | (3,220 | ) | (1,626 | ) | (12,813 | ) | (5,523 | ) | |||||||||
Non-GAAP net income | $ | 22,602 | $ | 22,892 | $ | 21,458 | $ | 89,280 | $ | 99,438 |
NETGEAR, INC. |
RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES (CONTINUED) |
(In thousands, except per share data) |
(Unaudited) |
STATEMENT OF OPERATIONS DATA (CONTINUED): |
Three Months Ended | Twelve Months Ended | ||||||||||||||||||
December 31, 2013 | September 29, 2013 | December 31, 2012 | December 31, 2013 | December 31, 2012 | |||||||||||||||
NET INCOME PER DILUTED SHARE: | |||||||||||||||||||
GAAP net income per diluted share | $ | 0.30 | $ | 0.37 | $ | 0.41 | $ | 1.42 | $ | 2.23 | |||||||||
Amortization of intangible assets | 0.12 | 0.11 | 0.04 | 0.39 | 0.12 | ||||||||||||||
Stock-based compensation expense | 0.13 | 0.12 | 0.09 | 0.45 | 0.37 | ||||||||||||||
Restructuring and other charges | 0.09 | 0.01 | 0.03 | 0.14 | 0.03 | ||||||||||||||
Acquisition-related expense | — | — | 0.02 | 0.02 | 0.02 | ||||||||||||||
Impact to cost of sales from acquisition accounting adjustments to inventory | — | — | — | 0.01 | — | ||||||||||||||
Litigation reserves, net | 0.04 | 0.01 | 0.00 | 0.14 | 0.01 | ||||||||||||||
Impairment charges | — | 0.05 | — | 0.05 | — | ||||||||||||||
Gain on sale of cost method investment | — | — | — | — | (0.08 | ) | |||||||||||||
Tax effect | (0.09 | ) | (0.09 | ) | (0.04 | ) | (0.33 | ) | (0.13 | ) | |||||||||
Non-GAAP net income per diluted share | $ | 0.59 | $ | 0.58 | $ | 0.55 | $ | 2.29 | $ | 2.57 |
SUPPLEMENTAL FINANCIAL INFORMATION |
(In thousands, except per share data, DSO, inventory turns, weeks of channel inventory and headcount) |
(Unaudited) |
Three Months Ended | |||||||||||||||||||
December 31, 2013 | September 29, 2013 | June 30, 2013 | March 31, 2013 | December 31, 2012 | |||||||||||||||
Cash, cash equivalents and short-term investments | $ | 248,154 | $ | 301,418 | $ | 288,103 | $ | 422,412 | $ | 376,877 | |||||||||
Cash, cash equivalents and short-term investments per diluted share | $ | 6.46 | $ | 7.69 | $ | 7.37 | $ | 10.82 | $ | 9.68 | |||||||||
Accounts receivable, net | $ | 266,484 | $ | 269,964 | $ | 288,483 | $ | 237,896 | $ | 256,014 | |||||||||
Days sales outstanding (DSO) | 69 | 68 | 73 | 73 | 76 | ||||||||||||||
Inventories | $ | 224,456 | $ | 211,275 | $ | 185,383 | $ | 158,555 | $ | 174,903 | |||||||||
Ending inventory turns | 4.6 | 4.9 | 5.5 | 5.2 | 5.0 | ||||||||||||||
Weeks of channel inventory: | |||||||||||||||||||
U.S. retail channel | 10.4 | 11.5 | 10.4 | 9.9 | 8.8 | ||||||||||||||
U.S. distribution channel | 11.2 | 9.9 | 9.0 | 8.9 | 10.2 | ||||||||||||||
EMEA distribution channel | 4.6 | 4.5 | 5.1 | 4.1 | 4.4 | ||||||||||||||
APAC distribution channel | 8.5 | 8.2 | 7.3 | 7.2 | 7.2 | ||||||||||||||
Deferred revenue (current and non-current) | $ | 26,433 | $ | 28,049 | $ | 33,717 | $ | 28,961 | $ | 27,645 | |||||||||
Headcount | 1,029 | 1,100 | 1,095 | 866 | 850 | ||||||||||||||
Non-GAAP diluted shares | 38,408 | 39,198 | 39,074 | 39,050 | 38,924 |
Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||||||||||
December 31, 2013 | September 29, 2013 | December 31, 2012 | December 31, 2013 | December 31, 2012 | ||||||||||||||||||||||||||||||
Americas | $ | 211,307 | 59 | % | $ | 220,487 | 61 | % | $ | 169,979 | 54 | % | $ | 789,318 | 58 | % | $ | 679,419 | 53 | % | ||||||||||||||
EMEA | 99,976 | 28 | % | 97,220 | 27 | % | 110,460 | 36 | % | 412,688 | 30 | % | 457,724 | 36 | % | |||||||||||||||||||
APAC | 45,337 | 13 | % | 44,188 | 12 | % | 29,997 | 10 | % | 167,627 | 12 | % | 134,778 | 11 | % | |||||||||||||||||||
Total | $ | 356,620 | 100 | % | $ | 361,895 | 100 | % | $ | 310,436 | 100 | % | $ | 1,369,633 | 100 | % | $ | 1,271,921 | 100 | % |
Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||||||||||
December 31, 2013 | September 29, 2013 | December 31, 2012 | December 31, 2013 | December 31, 2012 | ||||||||||||||||||||||||||||||
Retail | $ | 135,906 | 38 | % | $ | 130,301 | 36 | % | $ | 138,539 | 44 | % | $ | 509,924 | 37 | % | $ | 504,797 | 40 | % | ||||||||||||||
Commercial | 75,007 | 21 | % | 76,957 | 21 | % | 73,447 | 24 | % | 311,261 | 23 | % | 307,945 | 24 | % | |||||||||||||||||||
Service Provider | 145,707 | 41 | % | 154,637 | 43 | % | 98,450 | 32 | % | 548,448 | 40 | % | 459,179 | 36 | % | |||||||||||||||||||
Total | $ | 356,620 | 100 | % | $ | 361,895 | 100 | % | $ | 310,436 | 100 | % | $ | 1,369,633 | 100 | % | $ | 1,271,921 | 100 | % |
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